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Strategies & Market Trends : The Residential Real Estate Crash Index
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To: GST who wrote (241161)3/16/2010 5:50:21 PM
From: ChanceIsRead Replies (1) of 306849
 
>>> 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. <<<

Not quite. IF the population doesn't change and you have two MM bushels of wheat where you used to only have one, then the price of wheat will have to drop.

I think of money as a representation of wealth. Unfortunately, wealth is dependent upon supply. If you have an extra million bushels of wheat around the farm, and we fire missiles, and there is no more diesel to get the wheat to market, and the rats eat it after a week, do you still have any value there??

It isn't rocket science, but it isn't too simple either.

I think that the FED can be useful in printing money to stop runs on banks, but that is about it.
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