[Mavdog]

Originally Posted by alexamenos

MD -- you stated that fiat currencies are modern concept. I referenced a fiat currency from 1,000 years ago to demonstrate that they aren't a modern concept.

You state this fiat currency was only in exsitence for "a short period of time." Not only do I not disagree, but this is exactly my point.

so an emporer in china developed a fiat type currency that didn't even reach outside his realm, and that's an example of how "they fail within 100 years"?

not very persausive.

I don't know what you mean.

please take the time to learn abour public and private tender...

if we asked milton friedman or alan greenspan which was the more accurate measure I'm fairly certain that m2 would be the answer.

the two have their own characteristics. hint: that's why they are BOTH tracked. if one were wholly "more accurate", the other wouldn't be needed would it?

it is arbitrary to draw a line between money *immediately* available and money available after a few days, weeks, or even months. In either case the money is part of the overall supply of money.

guess you don't understand the disincentive placed on the retrival of time account funds.

if money isn't available today, how can it be used? answer: it can't.

one can borrow against it, at a cost. one can get to their ira or 401, but it costs you to do so. alot.

but the funds are out of reach at that point in time. they can't be used to purchase goods.

...the m1 supply has not been static, but has instead increased by more than 30% over the last decade, or slightly less than 3% (a number which not too surprisingly corresponds to FED published consumer price index rates over the last decade).

you really don't see the forest do you...or are you intentionally trying to be deceptive?

Q1 1997 m1 was at 1080.0
Q1 2001 m1 was at 1096.8

(so much for that 3% annual growth)

in response to the 2001 recession,
Q1 2002 m1 increased to 1190.0, increasing steadily to
Q4 2003 when m1 broached 1300.0 (1305.5 to be exact)

it's currently at 1375.9

(so much for that 3% annual growth again)

so, to summarize, a time period of 4 years of near static figures, 2 years of increase to combat a recessionary environment (btw a response milton friedman would endorse), and now 4 years of near static figures.

a graph of which does not correspond to the price index over the same period.

lessee....r-sq of cpi regressed on m1 = 99%....that is, 99% of the variability in the consumer pice index is explained by the supply of m1 over the last 45 years. The data is readily available on the web, and this process took me about 5 minutes -- you can check my math if you like.

Hence, inflation is unquestionably closely related to the supply of m1 (and that's by the US BLS's own exceedingly lame measures of inflation, measures which begin with the assumption that price increases are often the result of something other than an increase in price).

ah, so now you have changed your position, it is now "inflation is closely related to the supply of m1"....no shock to any of us out here btw, it's what we've been saying all along, that the money supply is but one quotient. the quantity theory says that very thing...
you on the other hand have been saying that money supply itself causes inflation.

I'm sure I'd enjoy a conversation with your six year old, I gather he knows at least as much about macro economics as you.

at least, unlike you appear to do, she and I understand supply AND demand....