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House Price Crash Forum

Economics & Inflation

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When refering to money supply and inflation people reach back and grab examples from past experience. Past experience shows that if money supply is increased we get inflation and currency devaluation. I don't believe the example is still valid.

If money supply is increased ahead of productivity we get inflation. If productivity is increased with no increase in money supply expansion is snuffed out. Is this why economy's have trouble pulling out of recession. It amazes me that when a complex economy starts to contract it seems to collapse into absolute poverty. It should not do so, it should not fall any further than a simple economy but it does. The self inflicted medicine of monetary contraction effectively kills the patient.

It is often stated that wars pull economy's to there feet. Does it have to be war though. Is Barack Obama right, can it equally be health care and capital projects. I suspect that this has some validity.

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