Denmark's 2006 public finances has a surplus of 6% of GDP

[Colonâ„¢]

If you assume a given budget at given time, an increase in the price of good A indeed implies there's less money available to be spend on other goods if the same amount of good A is bought. That means the prices of others goods will fall. This kind of equation has been an introduction to every economic course I've known.

Originally posted by KrazyHorse
Hell, even if there was no cash in existence we could still have monetary economic activity.



The government doesn't have to print any money at all for transactions to be completed. In fact, cash transactions account for only a small percentage of all economic activity. An increase in the money supply can be a cause of inflation, but is not the only one.

Only the narrowest definition of money supply solely includes physical money. More popular definitions such as M2 also including current accounts, savings accounts, etc. When economist use the expression "printing money" it's rarely meant to be taken literally.

[KrazyHorse]

Originally posted by LordShiva

This is a fundamental misunderstanding.

Indeed. He doesn't seem to understand the money velocity term you mentioned earlier.

EVEN IF THE TOTAL MONEY SUPPLY REMAINS FIXED THERE CAN BE MORE TRANSACTIONS IN A SINGLE YEAR THAN BEFORE.

When this happens the price for all goods can go up, i.e. inflation.

[KrazyHorse]

Originally posted by Colonâ„¢
Only the narrowest definition of money supply solely includes physical money. More popular definitions such as M2 also including current accounts, savings accounts, etc. When economist use the expression "printing money" it's rarely meant to be taken literally.

Vetlegion's not an economist. I assumed the worst, because his misunderstanding is that bad.

[KrazyHorse]

Not to mention the fact that the money supply is only partially under the control of th government...

[KrazyHorse]

Originally posted by VetLegion


http://en.wikipedia.org/wiki/Money_supply

What's really funny is that the graph which disproves your little hypothesis is contained in the link you provided.





(caption reads: US M3 money supply as a proportion of gross domestic product)

[VetLegion]

EVEN IF THE TOTAL MONEY SUPPLY REMAINS FIXED THERE CAN BE MORE TRANSACTIONS IN A SINGLE YEAR THAN BEFORE

Keep yelling.

The very man who invented the equation that so fascinates you observed money velocity to be fairly constant and ignored it. If you have evidence that velocity of money increases in what is commonly known as "overheating economy", let's hear them.

[KrazyHorse]

Originally posted by VetLegion

EVEN IF THE TOTAL MONEY SUPPLY REMAINS FIXED THERE CAN BE MORE TRANSACTIONS IN A SINGLE YEAR THAN BEFORE

Keep yelling.

The very man who invented the equation that so fascinates you observed money velocity to be fairly constant and ignored it. If you have evidence that velocity of money increases in what is commonly known as "overheating economy", let's hear them.

I don't know if that's the biggest effect or not. But your claim that it's impossible is ridiculous. Especially your quip about not being able to spend more with the same amount of money (which totally ignores the bilateral nature of transactions)

Take a look at the graph. It shows swings of ~40 percent in money velocity.

That's not negligible.

[Monk]

Next chapter ready to begin.

In which I think the labor unions eventually go on the heavy offense, claiming concesssions to an unusual degree for not calling off negotiations. Why doesn't Danish media cover the prospect of a general strike as the next attack on the PM? Is it really that unlikely?

Well, you heard it here first.

[Colonâ„¢]

Originally posted by KrazyHorse


I don't know if that's the biggest effect or not. But your claim that it's impossible is ridiculous. Especially your quip about not being able to spend more with the same amount of money (which totally ignores the bilateral nature of transactions)

Take a look at the graph. It shows swings of ~40 percent in money velocity.

That's not negligible.

Swings, not accumulated growth as is the case with money supply. Final demand follows M2 prett closely but forgot where graph?

[Colonâ„¢]

Weeeeh! wiskey

[Colonâ„¢]

Wii wiiskey! just to piss off asher.

[KrazyHorse]

Originally posted by Colonâ„¢


Swings, not accumulated growth as is the case with money supply. Final demand follows M2 prett closely but forgot where graph?

Oh, undoubtedly we wouldn't see decades of accumulated inflation with a constant money supply. But in the medium term (a few years) it's quite possible.

[VetLegion]

But your claim that it's impossible is ridiculous. Especially your quip about not being able to spend more with the same amount of money (which totally ignores the bilateral nature of transactions)

What about bilateral nature of transactions?

[KrazyHorse]

That it means that the same money can be spent more than once. Duh.

[VetLegion]

This thread is totally over your head. I suggest taking up something simpler.