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Politics : Foreign Affairs Discussion Group -- Ignore unavailable to you. Want to Upgrade?

To: Ilaine who wrote (30668)	5/24/2002 8:42:07 PM
From: LindyBill	Read Replies (1) \| Respond to of 281500

I like the idea that negotiable instruments were an important source of price inflation. As you know, I use a narrow definition of Inflation. I believe that inflation is a general price increase that happens when the money supply increases faster than productivity. It can be caused by metal or paper. I don't see negotiable bills of exchange causing inflation because they would tend to rise in use as trade rises, causing stability, not inflation. Without them, an increase in production caused by an increase in trade, or visa versa, would tend to be deflationary. A huge increase in Gold and silver, as happened in Spain, at a time when productivity in Spain was not increasing, caused their inflation, IMO.