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Strategies & Market Trends : Booms, Busts, and Recoveries -- Ignore unavailable to you. Want to Upgrade?

To: Ilaine who wrote (5899)	7/16/2001 5:08:18 PM
From: Maurice Winn	Read Replies (1) \| Respond to of 74559

<I agree that exponential growth is faster than arithmetic growth. An increase in the money supply causes prices to go up, ceteris paribus.> Yes, good old inflation due to money printing, alpha centauri. <A decrease in the money supply causes prices to go down, ceteris paribus.> Yes, there isn't much money but still the same amount of stuff to buy and people still want to buy it, tempus fugit. <An increase in production causes prices to go down, ceteris paribus.> Yes, for the most part, generalatum predictum. <An increase in demand causes prices to go up, ceteris paribus.> Yes, more mouths to feed means pay more for same amount, hungeritis desperados. <But in the real world, ceteris is never paribus, and more complex forces are at work on prices.> True, it's a confusing world, economickeymousilium befuddlinism. <An increase in production without an increase in productivity may cause prices to go up because the number of workers employed goes up to the extent that wages are increased.> Yes, pay higher pay rates makes prices go up, expensus excessis. <An increase in production accompanied by an increase in productivity may cause prices to go down because the increase in productivity reduces the costs of production, and thereby the price per unit of good produced.> Yes! My favourite one and the heart of The New Paradigm. I have been betting on this for years and was thrilled when mainstream economists and my idol Alan Green$pan realized it's big time in the current world, maximus productus infinitus. <An increase in demand may ultimately lead to lower prices because more people start producing the item demanded, and compete with each other for the customers, especially if productivity increases.> Yes, for example GSM prices dropping and same for CDMA ASPs, competitus goldrushitis. <An increase in the money supply may ultimately lead to lower prices because entrepreneurs use the cheap money to invest in more productive machinery, enabling them to turn out consumer goods via mass production.> Yes, not to mention the simple money printing issue, except that the increased money supply, like the old money supply, is competed for by way of interest rate offers, so the best use as determined by the greatest return on investment gets the money, investus opportunus maximus. >>if an economy is growing exponentially and the money supply arithmetically, that will cause inflation<< <How does that work?> It doesn't, brain spasmus stupiditis. If you can think War is Good, I can get that one wrong. Put it down to a slight lapse in brain function due to cold weather and not having had a nice cup of tea. I got myself tangled up with the exponent of the exponential graph and the rate of arithmetic growth and the words [instead of getting the meaning right]. If you draw a straight line up at 45 degrees, you'll see that an exponential graph, with a slow growth rate, is actually UNDER that line for a while, before swooping up to the sky, above the linear graph. So, probably to compound my mistake, for the period the economic growth exponential graph is UNDER the money supply linear graph, there would be inflation. Mqurice