Mish's Global Economic Trend Analysis Message Board

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Strategies & Market Trends : Mish's Global Economic Trend Analysis

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To: sciAticA errAticA who wrote (35764)	8/23/2005 4:45:55 PM
From: gpowell	Read Replies (2) of 116555

By the way - does Weimar ring a bell? I guess you’re not aware that the central bank had a hard time keeping up with bank note demand – after the hyperinflation episode ended. Yes, the printing presses were running 24/7 to satisfy the demand to hold bank notes. This is related to Keynes point – what would have happened had the bank not satisfied that demand? For Keynes the result would have been a reduction in output – as the price level would not automatically adjust to a fixed money stock. Oh, and I am not saying Keynes is correct here. BTW, the issue in most episodes of hyperinflation is not the amount of paper issued but the willingness to hold and accept that money in exchanges. I'm in utter awe of your confidence in the fed... and its notes (read IOUs)... The Fed? Weren’t we discussing bank notes vs. gold? But if you wish to bring the Fed into this, I don't have confidence in central control. You’re not understanding my comments, or my critique of Keynesian economics. My comments to you were mainly about your implied belief in a cost of production theory of value – as many gold money enthusiasts incorrectly assume that bank notes are not subject to marginal revenue/marginal cost constraints and thus reject all monetary systems involving paper and electronic debits. One has to separate issues related to central control from purely monetary issues. What was it that you posted earlier? "One must realize the real cost of producing (printing) bank notes is the costs related to ensuring it stays in circulation.." LOL! Your LOL does not mask the fact that you have not yet made a meaningful response to my questions, nor demonstrated an understanding of these issues.

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