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Strategies & Market Trends : Mish's Global Economic Trend Analysis -- Ignore unavailable to you. Want to Upgrade?

To: mishedlo who wrote (65997)	6/9/2007 1:13:09 AM
From: mishedlo	Respond to of 116555

I am going to actually take that back (slightly). A supply of money that goes nowhere (velocity = 0) will not affect anything Thus inflation is specifically about the supply and demand of money as opposed to the supply and demand of anything else. Supply and demand of oil, services, etc etc is irrelevant. Mish

To: mishedlo who wrote (65997)	6/9/2007 9:01:42 AM
From: GST	Read Replies (2) \| Respond to of 116555

The truth is exactly the reverse -- inflation is a persistent change in prices whatever the cause, and inflation can happen without money supply playing a role at all. The soaring price of a Harvard education is not determined primarily by money supply -- it is determined by social scarcity and the existence of wealthy people willing to bid the price up. You do nothing more than take a narrow ideological perspective and then pretend nothing else is real when you restrict consideration of persistent changes in prices to only those changes with a single cause. Reality is far more complex than this simplistic way of looking at it. Money mediates supply and demand. To ignore supply and demand and focus solely on money is to be blind.