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Old 10-20-2007, 02:25 PM
Copernicus Copernicus is offline
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Join Date: Jun 2003
Posts: 6,912
Default Re: If the Gold standard came back ...

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He has all the necessary knowledge to get it right, lays it out for you, puts it in the correct order even... and then just misses it. If M, V and P are held constant then Q cannot grow, but deflation is a decrease in P, which is on the same side as Q so a decrease in P leads to an increase in Q!


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lol, wow!

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What you are both missing is that deflation (a decrease in P) is undesirable in and of itself for the many reasons discussed elsewhere. He is holding P (relatively) constant because that is the main objective of monetary policy.
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