[Moseley]

[ QUOTE ]
well, to maintain the potential GDP levels on average it should grow by the amount that the economy grows in real terms (ignoring productivity for now. but overall, since increased productivity increases output potential by allowing more growth with the same resources, it should be subtracted from potential GDP).

anything less than this would produce deflation if that state was kept for a long period of time (consistent money growth of less than trend GDP growth would produce deflation).

similarly, anything more than that would, int he long run, produce "too much" inflation.

so the *should* comes from the fact that in my mind at least, we should all want to grow at potential GDP, or as close to it as possible without producing either large inflation or deflation.

Barron

[/ QUOTE ]

This I fully understand. That is why, despite the fact that Clinton balanced the budget and had a fruitful economy under his Administration, he stole from the middle class & fixed income citizens, as he increased the money supply by over 10% per annum (some claim it was 15%), while GDP increased about 3.5%.

Bush is doing the same thing, only more secretly, behind closed doors with his "economic advisors." Ron Paul claims the money supply is increasing at 20% now.

This is the sole reason, as far as I am concerned, that my father-in-law, who had it so well off in 1990, is now complaining.

He is far from living from check to check, he just spent money on a new mattress & boxsprings because the ones he has owned for 3 yrs "just doesn't feel right," and goes on trips up and down the east coast about 6 times every summer.

If he liquidated everything he has and put it into bonds and moved into a retirement home, he would have approx 750k, his retirement and his ssi, however, at 85, he knows how to use a computer, track his cost of living, and sees his buying power decreasing every year at a faster rate (from 1990-2007) than any other 15 year period in his life, so he claims.

My wife (we live alone) claims our monthly cost for groceries has gone from $320 to $400 over the last 2 years.

That is is our largest monthly expense, after our $775 mortgage payment.

Our cost of living has increased much faster than the 2.5% that Bernanke claims, and nothing has changed in our household.