4 ms·
> "printing money" doesn't automatically make money worth less.) Why not? Intuition says that it should. So I think that’s what GP is trying to understand. It
by ghiculescu 4y ago
> "printing money" doesn't automatically make money worth less.)
Why not? Intuition says that it should. So I think that’s what GP is trying to understand.
It seems like you’ve substituted their model with yours but haven’t explained how yours works.
- JumpCrisscross 4y ago> Intuition says that it should. So I think that’s what GP is trying to understand. Velocity [1]. Ignoring it is like sticking a water wheel in the ocean and asking why it doesn’t turn given the depth. Quantity doesn’t turn it. Flow does. And that depends on more than how much water is present. [1] https://en.m.wikipedia.org/wiki/Velocity_of_money https://en.m.wikipedia.org/wiki/Velocity_of_money
- panarky 4y agoHaven't heard the water wheel in the ocean analogy, and I love it! Thank you! There's a very simple mathematical identity: MV=PQ M is money supply, V is velocity, P is price level, and Q is all goods and services. So if the economy produces the same amount of stuff (Q is constant) and if V falls in the inverse ratio as the increase in M, then the price level will not change.