Quote:
Originally Posted by doobnVA
No, they are not "the same thing", but they are not completely independent of one another. Money supply has a DIRECT impact on inflation, even according to the website you're so fond of quoting from.
You're saying money supply doesn't cause inflation, and you're just plain wrong. IT absolutely does, and everyone but you seems to recognize it.
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Inflation is INDEPENDENT of changes in money supply. An increase in production costs, labor costs, raw materials, exchange rates, taxes, reduction in supply, increase in aggregate demand, all conribute to inflation and have NOTHING to do with the money supply.
You are wrong. Increasing the money supply CAN cause inflation (and most certainly will with regards to the Fed and their current policy) - HOWEVER increasing the MS does not HAVE to cause inflation.
Printing money when the demand remains unchanged or is decreasing will cause inflation ceteris paribus. Ceteris paribus - Printing money when the demand for dollars is increasing will cause the 1. value of the dollar to increase, 2. stay the same or 3. decrease depending on whether 1. not enough money is printed to satisfy demand 2. the exact amount of money is printed as is demanded 3. more money is printed then the demanded.