3 ms·
Doesn't the supply of stuff also matter? How about people's expectations of future prices? How about global-market linked prices of economic inputs, foreign mon
by xyzzy123 4y ago
Doesn't the supply of stuff also matter? How about people's expectations of future prices? How about global-market linked prices of economic inputs, foreign money supply creation? Etc.
I think I could come up with 50 reasons why prices might increase if I sat down long enough.
- thaumasiotes 4y ago> Doesn't the supply of stuff also matter? It matters. > How about people's expectations of future prices? These also matter. Now ask yourself how they matter. Any fall in the value of money must come from an increase in supply or a decrease in demand. If we expect future prices to be much higher than they are now, we will seek to hold less money (because its value in the future is lower) and this drop in the demand for money in the present will drive down the value of money in the present.
- stephen_g 4y agoYes, understand what the parent is putting forward is a fringe theory. Some schools of economics like Austrian economics are obsessed with the money supply and ignore other factors that clearly matter a lot.
- thaumasiotes 4y agoBefore you describe something as a "fringe theory", you might want to check whether it is taught by major textbooks in the field. (In this case, try reading https://www.macmillanlearning.com/college/us/product/Macroeconomics/p/1319263909 https://www.macmillanlearning.com/college/us/product/Macroec... )