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Strategies & Market Trends : Bob Brinker: Market Savant & Radio Host
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To: MrGreenJeans who wrote (4826)5/4/1998 12:20:00 AM
From: michael meyers  Read Replies (1) of 42834
 
Mr.GreenJeans,

Not every one would agree with your explanation, however, I understand it is debatable, i.e.

Generally speaking, an increase in the money supply decreases rates and a decrease in the money supply increases rates.

Actually vice-versa. An increase in the money supply signals future inflation which causes the market to bid up rates. However, over the short term, an increase in the money supply does exactly as you say because of short term supply/demand effects.

Absolutely, many monetary economists believe there is a direct effect between monetary growth and GDP growth.

No, they don't. Monetary economists believe monetary growth affects inflation, but has no effect on real GDP growth.

relatively simple terms there is no better book written on the subject than Paul Samuelson's Economics.

Robert Barro's book is better.

Regards,
Michael
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