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Gold/Mining/Energy : Gold Price Monitor -- Ignore unavailable to you. Want to Upgrade?

To: long-gone who wrote (86331)	6/4/2002 12:57:07 AM
From: Don Lloyd	Read Replies (2) \| Respond to of 116762

l-g, ...currency growth must respond to demands of society... It is a common fallacy that growth in the quantity of money is required. All economic goods can be divided into two broad categories. They are either goods to be purchased and used or consumed, or goods, including money, that store future purchasing power. Many goods fall partially into both categories, but in any case it is every individual that decides for himself whether, and what degree, the goods he holds are intended to be consumed or to store future purchasing power. Between both categories, a dynamic balance exists that continually adjusts the exchange rates or prices that result from the subjective choices of individuals. This is what happens with money. If a situation exists in which you would for some reason want to increase the quantity of money, what happens instead is that the purchasing power of the monetary unit increases. When society thinks it wants more money, what it really wants is more purchasing power and the marginal dollar is held more tightly and less money is spent, and the purchasing power of the dollar rises. Since modern money is almost entirely valued for its utility as a store of value, every other good can serve as quasi-money if it is held with the intent of storing up future purchasing power, so some degree of an increase in the effective quantity of money may happen anyway. Since there are a large number of significant and unmeasurable factors that affect the purchasing power of money, it is completely futile to suppose that it can be stabilised better than the free market dynamically adjusts. Nor is it desirable as the attempts produce both undesired side effects and instability. Regards, Don