Qualcomm Incorporated (QCOM) Message Board

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Technology Stocks : Qualcomm Incorporated (QCOM)

QCOM 156.34

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3:59 PM EST

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To: dougjn who wrote (15925)	10/2/1998 3:49:00 PM
From: Joe NYC	Read Replies (1) of 152472

Doug, My question still is how you increase inflation in environment Japan is in right now without completely upsetting the system. Under normal circumstances, increase in money supply at rate higher than increase of output at first fools people and increases output, and in the long run causes inflation (which for years we tried to prevent). In short, unreasonable increase of money supply lead to inflation. But this rests on many assumptions, like velocity of money (it's been years since my econ 101, correct me if I am wrong here), the fact that banks would lend the new money out, keeping only required reserves (over and over to create the multiplier effect) and a somewhat closed system. But some of these assumptions don't hold. Banks are not lending the money. The system is not closed, because you have a valve to outside world which causes money to escape the Japanese system and inflate US Treasuries instead. You kind on need people to bid up prices of things, or some kind of scarcity, or lack of supply to fuel the inflation cycle. All those things are absent in Japan. Joe

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