Quote:
Originally Posted by tc-sacto
Yes, Inflation is the only constraint on a floating exchagne rate currency system. However, that is currently not a problem with our giant output gap from our current productivity to what our potential is. That is why the deficit spending is needed. Increasing the money supply in an of itself doesn't cause inflation. That money has to go somewhere. Currenlty mzm and m2 velocity are way down.
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So what they have done amounts to pushing on a string. The conventional Keynesian wisdom of the last 70 years has not worked. I will postualte rethink that position. Think out of the box.
Realize that day that GW came on the Tube and said we were in a crisis..was a game changer. A whole new set of rules are at play now. I will get back to U when I have time.