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: SouthFloridaGuy who wrote (76525)	3/19/2008 8:20:16 PM
From: stockfiend	Read Replies (1) of 116555

If money supply and credit can expand without causing price increases (90's) then it stands to reason that money supply and credit can contract without causing price decreases (today). How did money and credit expand in the 90's without leading to general inflation? Imported deflation from international wage and production cost differentials. How can money and credit contraction still allow for general inflation today? Imported inflation from diminished wage and production cost differentials. Prices can only fall from contracting money supply if the supply of money drops below the amount needed to support world GDP plus some magic number. We are still many multiples above that amount.

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