2 ms·
> This article lost me at "printing money does not cause inflation." How would that be possible? Consider the equation of exchange (https://en.wikipedia.org/wi
by nullc 7y ago
> This article lost me at "printing money does not cause inflation." How would that be possible?
Consider the equation of exchange (https://en.wikipedia.org/wiki/Equation_of_exchange https://en.wikipedia.org/wiki/Equation_of_exchange): MV = PQ.
The amount of money (M) can be increased without prices (P) going up so long as either the velocity (V) of money goes down or the economy (Q) becomes larger.
- Zarath 7y agoJust off the top of my head, if money supply increases at the same rate as human population growth, it seems like inflation should remain constant?
- nullc 7y agoYes, to a super vague hand-wavy level (which all this sort of economics is..)-- e.g. ignoring that not all persons are equal in the economy.