You got quite pithy. I never attacked you - but I find it amusing that right after you say "there is no need to attack me" you follow up with calling me "whack" "wrong" "get over trying" and "god damn people and their precious fucking egos."

Thanks for explaining that you did not author the article. Unlike your lack of ability to answer a question which is willful; I don't know your legal name or psyudonyms so for all I know you could have authored the article - Sorry for the confusion; when I said "your model," I was reffering to the model that "you" chose to cite.

LOL Thanks for the laugh. You didn't answer any of them; either because you can't with your limited knowledge or because you would have to admit that I am right. Is your ego getting in the way?

Telling someone they have a lack of understanding when you think that the world would be able to function with the same unaltered money supply from the times of Jesus is more than laughable.

It is amazing that you can deduce my lack of knowledge of a topic when you seemingly do not understand the effect of a double shifting supply and demand curve.

LOL again - Do you just make assumptions that since they have inflation that precious metals are the only way to conduct transactional business? Is that what Ron Paul and Peter Schiff have told you happens?

So good I must quote twice.
"they only accept gold/silver for the majority of your day to day must have items like food." LOLOLOLOLOLOLOL!!!

You are a absolute fool if you believe that statement. They barter!!! Enlighten yourself and your ego with this article. http://www.npr.org/templates/story/s...oryId=97393070

I am not saying it is right or good. I myself am not an "average" American anymore - Unlike everyone I know I own every tangible thing I have - the only debt that I have is my student loan, I have a nice savings account, and a checking account that we use responsibly.

The price of housing is outrageous, but I feel that is a factor of society. I think my parents and my grandma are the only people I know that own their homes. People only put 20% MAX and they want a house yesterday. Can you imagine how few people would own a home if they had to pay 100% cash upfront and no banks would finance a house?

I am friends with a developer that was making money hand over fist - he initially financed the land which he paid off, contracted the houses with his own workers including supervisors, sales staff, and carpenters, he had a "preferred" mortgage guy that was kicking him points on the backside. He did no work other than making a few smart business decisions up front; but nothing that warranted the amount of profit per house that he was making (he would be the first to tell you that).

Thanks for the compliment.

If we all had to pay 100% cash upfront it is likely that home ownership would climb. The idea that you own your house when you have a mortgage is a joke pushed by Madison Avenue for the banks' profit. You do not own your house until the note is paid off, and if you have a mortgage on it then you are not going to see any profit in your house (unless you are an imbecile that just jumps from house to house.)

First, there's the $150,000 that you start out owing, by the time you include interest you have paid 2 - 3x that, or $450,000. So any profit from the sale is eliminated. Of course in cities the congestion and density make it not even worth the effort of owning a house as anything more than a place to sleep as there is practically no land that you can really do anything with.

About the only way I'd purchase a house would be 20 - 30 miles outside of the city limits with 4 - 5 acres that I can either do subsistence farming on or turn into a nice escape from the city. Of course with inflation my pay is consistently being deprived of its value, yet another point against inflation.

It is a grave disservice to the poor and the working and middle classes for the government to pursue the insipid policy of inflation, as it pushes prices up faster than pay, because pay is both bottom and top sticky. Instead of increasing the quality of life inflation decreases the quality of life. While loans do self-amortize the cost of food, shelter, water and other essentials go up.

It is a catch 22, but ultimately as those that are poor rarely have the debt loads of the average american it does them a greater disservice. Once again it ignores those that either A. own everything outright, or B. have a minimal amount of wealth and robs them of purchasing power. It also deprives those that have saved and gathered wealth of the ability to use the wealth that they have saved to make other purchases. Ultimately inflation will probably be found to have a drastic cumulative slowing effect on the economy as the effects of inflation are not linear or geometric but are exponential, thus the savings from 10 years ago lose 21.8% of their purchasing power, the savings from 9 years ago lose 19.5% of their purchasing power, and down the line at a cumulative 2% rate of inflation. As inflation is rarely held at 2% due to the irresponsibly policies of the Federal Reserve (which ironically states that one of its goals is to maintain the value of the dollar) the effects are drastically worse than those shown above.

Being punished for hardwork, diligence and thrift is absurd, because those are the habits of a prosperous nation that owns its own homes outright with out mortgages from the bank. They are the habits of an industrious nation that is gathering wealth instead of a slothful nation that is increasingly pursuing credit and attempting to get something for nothing.

It also hurts those that have retired and are on fixed incomes.

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Libertas inaestimabilis res est - Liberty is a thing beyond all price. | Sic Semper Tyrannis

Maybe this guy is whack, WRONG WRONG WRONG too. Afterall he says EXACTLY what I have been saying.

http://www.marketoracle.co.uk/Article4482.html
"Now, there is no exact way to determine the right size of the money supply. It definitely needs to grow each year by at least the growth in the size of the economy, new population and productivity or deflation will appear. But if money supply grows too much then you would have inflation."

It is a higher reading material than the article NoDrama posted - but I promise you will enjoy it if you are at all interested in what is going on in our economy.

This guy too!

http://books.google.com/books?id=qR0...esult&resnum=4

Who are you talking about?

Oh well, as far as the quote above. Not so much, even if it grew with the population there would still be inflation. For the most part what determines economic activity is not money supply but the vectors of the money supply. That is how fast, and how far it travels before it is taxed out of existence, or held onto either in Checking Accounts or Under Mattresses. In the case of the former (Checking Accounts) it is likely that the money will sit temporarily before re-entering the money supply to start moving around again.

The economy is defined by the movement of money, not the quantity of money, so arguing that it should be always increased to keep up with population growth is a flawed argument. Very rarely does any one have all of their earnings for a year shoved under their mattress, or even any sizable fraction. For the most part as soon as they get it they give it to some one else, who gives it to some one else, repeated until the money gets taxed out of existence, or leaves the country (of course it then does the same thing outside of the country where it does not do a damn thing for the National, Regional or Local Economies.)

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Libertas inaestimabilis res est - Liberty is a thing beyond all price. | Sic Semper Tyrannis

As far as paying off debt, I think a little inflation could be good for the NATIONAL debt... but the "average" american? Nope.

The link is there now - RIU became temporarily unavailable while posting. The first article deals with Velocity and explains why there is an influx of cash now. There is a second link as well now.

Is it flawed? So our economy when the population is 2x what it is now should have the same money supply?

Great post! Poetic.

the only thing that i will concede on in your argumet is that if you owe money, you will make out, but only for a short time.

you said you r not an average american and u have savings. if you use that savings to pay off previous debt then u make out. but any future debt or products you buy are now costing X times inflation. if you dont immediately use your savings, it quickly becomes useless.

as for using your money responsibly, inflation takes that ability away from you. i dont think you will find any economists tryign to convince people that inflation is good.

The money supply would not make a difference, if you double the money supply you halve the value of each unit. There might be an increase in the size of the pie, but it is not through the money supply, the money supply is nothing more than the equivalent of a thermometer that can be used for gauging economic temperatures at best.

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Libertas inaestimabilis res est - Liberty is a thing beyond all price. | Sic Semper Tyrannis