Deflation Despite Increases in Money Supply

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Uploaded by on Jul 22, 2011

How you can have deflation even if the money supply increases

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  • KHAN! PLEASE!!! MAKE A VIDEO OF WHAT HAPPENS IF THE USA DEFAULTS AND WHAT THE REPERCUSSIONS ARE FOR THE WORLD AND EUROPE!

  • YAY! I WATCHED ALL OF THE KHAN ACADEMY FINANCE PLAYLIST! ITS LIKE I HAVE A MASTERS DEGREE IN BUSINESS!! WOOOO!!!

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  • People don't bury money in the ground, they look for a return on their investment. IN GOOD TIMES, PRICES SHOULD GO DOWN because more things are produced. In bad times, less things are produced, so prices go up. AND IN THE LONG RUN, PRICES SHOULD GO DOWN, as we get better at making things. Of course we haven't seen the benefits of falling prices because the Fed prints too much money and causes inflation. The inflation tax steals value from your bank account without you knowing it.

  • @moguai352 @ProfessorWilbur123

    Please don't use all caps. Thanks.

  • @rmstorms I thought you were talking about political parties for some reason.

  • @mrhnm Did you bother to watch the video? There are only 2 parties...

  • @rmstorms Yep, silver compensates for the inflation of the fiat system. Because it is actually something as opposed to magic money...

    "There are only 2 parties" What pray tell are you talking about?

  • @mrhnm And that is why the first act of Congress was to define the metal weight of a dollar in silver and gold. Silver is real money. It's value is the result of effort. In the situation described in this video, gold wouldn't necessarily have value. There are only 2 parties.

  • @rmstorms No I turn all of my money into goods, instead of putting it in a savings account I go down and buy silver...

  • Well, as I'm sure you know Sal, this is a controversial area. I suppose I agree that you can *temporarily* have deflation and an increasing money supply at the same time, but IN THE LONG RUN, there will always be rampant inflation after everyone regains their optimism. That inflation will be at whatever level is necessary to reflect the "new total quantity" of money in the system.

    What you have really explained here, Sal, is how the market can be temporarily distorted.

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