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To: economist-student
Cool. You and I are on the same page on a number of issues.

BUT! If, indeed, monetary inflation is, in the classic dichotomy, "neutral", it cannot therefore be "inherently immoral". Hyperinflation is the result of trying to appease a population or destroy an economy long after the problem was first detected.

In re real prices - inputs and outputs remain constant REGARDLESS of what goes on with nominal. As Friedman and Phelps pointed out -- it evens itself out. Some management is required to stabilize inflation and unemployment; but overreaction to perceived or antipcated or expected inflation is what causes the inflation/unemployment pendulum to swing into large arcs.

22 posted on 04/20/2006 9:47:58 AM PDT by Alia
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To: Alia

Monetary inflation is always immoral.

Why can't I do for myself some "monetary policy"?

The Fed, and all central banks for that matter, are legalized counterfeiters. If M3 increases 10%, prices are not going to increase 10% all across the board. Whoever gets the newly printed money first benefits from it. It doesn't matter if if it's 3% or 10% per year, inflation redistributes wealth.

The dollar and all currencies should be backed by gold.

Inflation cannot occur in a truly free market economy.


24 posted on 04/20/2006 11:10:40 AM PDT by economist-student
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