tag:blogger.com,1999:blog-2948538160252327076.post8693513211160665618..comments2023-11-02T15:48:50.381+00:00Comments on UK Bubble UK Economy: US inflation acceleratesAlice Cookhttp://www.blogger.com/profile/05753570123987780947noreply@blogger.comBlogger4125tag:blogger.com,1999:blog-2948538160252327076.post-32357976634187724172008-08-14T20:03:00.000+01:002008-08-14T20:03:00.000+01:00The US economy is a train wreck.The US economy is a train wreck.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-2948538160252327076.post-42540998571389994122008-08-14T17:24:00.000+01:002008-08-14T17:24:00.000+01:00Alice, I disagree.The corollary to the velocity of...Alice, I disagree.<BR/><BR/>The corollary to the velocity of money being stable is that the rate of transactions is stable.<BR/><BR/>If we look at mortgage approvals data, for example, this is clearly not the case for houses. I'd argue that this is not the case for all discretionary spending... Inflation for non-discretionary items will be greatly influenced by supply or demand - which will react, after lag.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-2948538160252327076.post-55529260830766818502008-08-14T16:21:00.000+01:002008-08-14T16:21:00.000+01:00Velocity is stable asteve. In our current, anchorl...Velocity is stable asteve. In our current, anchorless monetary system, money begins as debt, bit it is also a means of exchange. It doesn't matter whether it takes the form of paper or an entry in an bank balance sheet, it chases a fixed about of goods. If there is more of it running around today than a year ago and the supply of goods hasn't increased, then prices will rise.<BR/><BR/>AliceAlice Cookhttps://www.blogger.com/profile/05753570123987780947noreply@blogger.comtag:blogger.com,1999:blog-2948538160252327076.post-67119427479012875592008-08-14T16:14:00.000+01:002008-08-14T16:14:00.000+01:00The reason people are confused is exactly the same...The reason people are confused is exactly the same as the reason why there is a confusion about the value of assets.<BR/><BR/>"More money" (printing as you call it, lending as I insist) does not increase prices unless that money is used for consumption... <BR/><BR/>Suppose we have an economy where Widgets are assets - and A has a widget (and will need to sell it to meet debts) and B is owed money by A, but has no Widget and would prefer a widget to money. While widgets are profitable, the widget generates the earnings to pay A interest. B's bank balance increases as he saves to buy the widget from A, and A borrows from B to keep 'heads above water' and to pay interest to B. No additional money is available for A or B to "waste" on beer - as they're locked in this battle... so beer prices are stable. What is more, if A eventually decides to throw in the towel; sell-up and repay debts... and B buys, "money" is destroyed. It makes no difference if A owes B £1000 or £1m or £1bn... none of this money will influence the price of beer - unless bad debt is fraudulently presented as good debt.<BR/><BR/>The amount of money itself is only one variable... the other is velocity. The velocity of consumption money is far higher than investment money. The snag, however, is that it is impossible to clearly distinguish between the two.Anonymousnoreply@blogger.com