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To: econjack
Only allowed because the currencies are no longer backed by specie, which allows unlimited budget deficits and unlimited trade deficits.

When those deficits have to be paid for in bullion, you can't hide the devaluation of the currency that's occurring.

In this sense Nixon - who took the US off the gold standard- is father of this current mess.

13 posted on 03/18/2019 1:12:23 PM PDT by pierrem15 ("Massacrez-les, car le seigneur connait les siens")
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To: pierrem15

Not true. Gold has nothing to do with it, nor does the gold standard. The Quantity Theory of Money explains it pretty simply:

M * V = P * Q

where:
M is the supply of money
V is the velocity of money (i.e., its turnover rate)
P is the price level
Q is the level of real output

The velocity of money is remarkably stable and has been for decades. Therefore, if you increase the money supply by 3.2% you need to have a corresponding increase in real output. If the change in real output is less, then prices will increase. AOC’s solution is to print more money! Can she really be that stupid? She is no econ major or Boston University needs to reevaluate it econ major.


18 posted on 03/18/2019 1:20:53 PM PDT by econjack
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