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

To: mishedlo who wrote (50618)	1/21/2006 2:06:31 PM
From: gpowell	Read Replies (1) \| Respond to of 110194

Had you been able to answer this simple question, I don’t think you would be so quick to characterize increases in the money supply as inflation, or necessarily inflationary (if using the standard definition of inflation). Message 22043061 Given that the price level is the intersection of money supply and money demand. It must be a measure of how thoroughly the monetarist position has influenced monetary thought that everyone, including those that would label themselves Austrian, assumes that monetary demand is constant and therefore the price level is completely determined by the supply of money. It may have escaped your attention the one of the characteristics of a hyperinflation is a falling demand for money, such that money supply measures may actually shrink even as prices "hyper" inflate. Hyperinflation = delta P > 50% per month. Once monetary demand, especially foreign demand for dollars, is accounted, for monetary reserves have not risen much since 1986. Further, given a presumed greater elasticity of demand with respect to inflation, the increase of foreign holdings of dollars helps to constrain and discipline the FED with respect to reserve creation.

To: mishedlo who wrote (50618)	1/21/2006 2:16:11 PM
From: ild	Read Replies (1) \| Respond to of 110194

<<<Which I repeat is why targeting prices is a fools game. >>> Mish, what I (and I think many others here) do is trying to predict prices on various assets and securities. Which of course is a fools game. -g- I foolishly started this discussion about definition of words inflation/discussion. Since we still can't agree on a common definition IMO it would be better we just avoid using these words. You for example you can substitute "inflation" with "increase in the money supply" and GST will use "increase in the general level of prices". This will be very inconvenient, but we'll definitely avoid a lot of unnecessary aggravation. What do you think? EDIT: I know that you won't stop using words inflation/deflation, but when you do please assume that many use the same words to describe VERY DIFFERENT THINGS.