RE:RE:RE:RE:RE:RE:RE:WHY TRUMP MUST WIN.
Frankie10 wrote: I most respectfully disagree - I believe 'inflation' is the expansion of the money supply. There is no price inflation without monetary inflation. Under a hard money standard, i.e. gold, there would be price deflation with modest monetary inflation due to technological advancement. Highly recommend Jeff Booth's book Price of Tomorrow.
An increase in the money supply does not necessarily increase inflation. If you expand the money supply by x% and you increase the volume of goods by x% with an unchanged velocity rate then inflation is 0%.
M = money supply
V = velocity of money
P = price level
Y = real gdp
Δ M + Δ V = Δ P + Δ Y
x% + 0% = Δ P + x%
solving for p,
x% + 0% - x% = Δ P
0% = Δ P
The change in price level; that is, Δ P is equal to the inflation rate for the economy.
inflation = 0%
Finally, I will repeat that QE does not create inflation but it distorts the valuations for assets such as stocks and bonds. It does not change the price of milk and eggs that you have to pay for at the store.