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Strategies & Market Trends : The Residential Real Estate Crash Index
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To: ChanceIs who wrote (241159)3/16/2010 5:34:13 PM
From: GSTRead Replies (2) of 306849
 
<money only raises prices—i.e., dilutes its own purchasing power>

Good grief -- if you have a million dollars and a million bushels of wheat -- you have a one to one relationship. If you have two million bushels of wheat and two million dollars you have exactly the same relationship -- one to one. It is not the growth of money supply that in itself matters, it is the relationship between money and goods that is significant.

The supply of goods and services is NOT constant -- nor should money supply be constant. Inflation takes place when the rate of increase in money supply is faster than the expansion of the supply of goods and services.

This is really not rocket science. Mish is simply wrong.
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