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To: Moonman62
Economic growth is deflationary

Huh??

'splane it Ricky???

41 posted on 06/30/2004 2:37:58 PM PDT by evad (What's BAD for democRATs is GOOD for America)
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To: evad

All else being equal, more goods and services allow more choice for consumers, plus given a constant money supply there is less money to pay for them.


46 posted on 06/30/2004 3:52:43 PM PDT by Moonman62
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To: evad
Economic growth is deflationary

Huh??

'splane it Ricky???

Inflation means the growth of money (what THAT is is a LOT more complicated than your question!) faster than the growth of goods and services. Hiking the interest rate reduces the growth of money (it costs more to lend, which creates money (!))

A growing economy increases the growth of goods and services, sometimes faster than the growth of money. That's what's deflationary, since more goods and services than money cause deflation, which is the increase in the value of money.

Clear now, Lucy?

54 posted on 06/30/2004 7:20:03 PM PDT by Forgiven_Sinner (The Passion of the Christ--the top non-fiction movie of all time)
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