This article only addresses overcapacity not the money supply. As we print more and more dollars they became worth less and less. The dollar is not pegged to gold anymore. You have to realize that economic changes do not happen immediately. Please use some common sense. 1 + 1 still equals 2. More and more money means that it will be worth less! This is inflation, when a dollar today is worth more than a dollar in a year than we have inflation and the massive unprecedented growth in the money supply is going to bring on a humdinger.
Perhaps a little more than common sense is called for here. You stated correctly that too much money chasing too few goods is inflationary. It is. If we are under-utilizing our productive capacity, this is a safety valve against inflation. If more goods can easily be produced to meet all those dollars, the inflationary pressure is reduced if not eliminated.
Ultimately, more and more dollars being "printed" will cause inflation. However, you miss the point. Bernanke is able to pull those dollars back in and reduce the money supply. This is what he will do once we are beyond the threat of deflation.
Again - you need to know which threat needs to be addressed and when. Inflation is not the problem now. Deflation is. Rising prices will be the next problem. The sooner the better!
Yes - as more and more money is "printed" it is less precious.
2 comments:
This article only addresses overcapacity not the money supply. As we print more and more dollars they became worth less and less. The dollar is not pegged to gold anymore. You have to realize that economic changes do not happen immediately. Please use some common sense. 1 + 1 still equals 2. More and more money means that it will be worth less! This is inflation, when a dollar today is worth more than a dollar in a year than we have inflation and the massive unprecedented growth in the money supply is going to bring on a humdinger.
Mark -
Perhaps a little more than common sense is called for here. You stated correctly that too much money chasing too few goods is inflationary. It is. If we are under-utilizing our productive capacity, this is a safety valve against inflation. If more goods can easily be produced to meet all those dollars, the inflationary pressure is reduced if not eliminated.
Ultimately, more and more dollars being "printed" will cause inflation. However, you miss the point. Bernanke is able to pull those dollars back in and reduce the money supply. This is what he will do once we are beyond the threat of deflation.
Again - you need to know which threat needs to be addressed and when. Inflation is not the problem now. Deflation is. Rising prices will be the next problem. The sooner the better!
Yes - as more and more money is "printed" it is less precious.
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