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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: philv who wrote (36313)	7/19/2005 12:50:12 PM
From: Tommaso	Read Replies (3) \| Respond to of 110194

>>>the money supply must increase and keep up to the GDP, or else new investments would be chocked off<<< Actually the money supply decreased on the whole under the gold standard in the U.S. 1865-1900, a period of, mostly, increasing prosperity, interrupted by depressions. I don't understand the money supply figures for the last two years. They seem quite disciplined, yet the expansion of credit via mortgages and refinancing mortgages has been huge.

To: philv who wrote (36313)	7/19/2005 1:21:20 PM
From: Umunhum	Respond to of 110194

I think you would agree that in this fiat system, the money supply must increase and keep up to the GDP, or else new investments would be chocked off. Yes, either money supply or money velocity. As I understand it, there are three factors involved in inflation - Money Supply, Money Velocity, and Production Growth. Many analysts have made the point that much of the debt and money creation is not going to finance new viable business or increased productivity, rather to consumption which has no long term economic benefit. Yes and this money is then sanitized by the foreign central banks buying up our treasuries - thus keeping money supply and money velocity down. This keeps inflation at bay until eventually these governments cash in their treasuries to buy resources.