Re: Which currency system do you think is best?
[ QUOTE ]
[ QUOTE ]
[ QUOTE ]
why do you think the money supply does not need to grow? i guess in the sense that the economy doesn't "need" to grow at a certain rate, but i think it is best htat the economy grow as best it can within certain bounds. if the price of money rises as demand for it rises, the marginal use of it will fall and the economy will not grow as it would had the money supply increased by the rate of growth of the economy (about the "band" i was talking about).
[/ QUOTE ]
Think about techonlogy. Productivity has been inreasing faster than the money supply for ages. This doesnt stifle growth, innovation, or impose an negative costs on the industry. This what is known as benign deflation.
[/ QUOTE ]
[/ QUOTE ]
can you link data for this? i think productivity has been growing far slower than the money supply in the US (~1-5% vs. ~8%) for a while.
[ QUOTE ]
another thing i wanted to mention is there no bounds by which an economy must be restrained. This is only a factor of situation today since bankers must make trade offs between inflation and growth.
[/ QUOTE ]
but keeping the money supply 100% fixed does restrain economic growth.
the point about productivity though is a good one and i should restate that the money supply should grow by the economic trend growth rate minus the trend growthrate of productivity.
Barron
|