Block, Siteadmin, SkipCaptcha, Upload, Automoderated users, delete, edit, move, nsTeam2RO, nsTeam2RW, nsTeam2_talkRO, nsTeam2_talkRW, protect, rollback, Administrators, template
293,535
edits
Changes
→Monetary theory
==Monetary theory==
==Monetary theory==
To hold prices stable in a growing economy, the amount of currency in circulation should be held commensurate with the net rate of growth of new workers entering the labor force, which itself is a function of population growth.<ref>both natural increase and by immigration.</ref> Inflation occurs when a country is flooded with currency in excess of its growing population, and hence, its economic growth. In a country with a declining population, a similar phenomenon can occur if the amount of currency in circulation remains high as the number of workers and consumers declines.
To hold prices stable in a growing economy, the amount of currency in circulation should be held commensurate with the net rate of growth of new workers entering the labor force, which itself is a function of population growth.<ref>both natural increase and by immigration.</ref> Inflation occurs when a country is flooded with currency in excess of its growing population, and hence, its economic growth. In a country with a declining population, a similar phenomenon can occur if the amount of currency in circulation remains high as the number of workers and consumers declines.
If for example money supply growth were held flat within a growing population, new workers would find it difficult to find jobs, let alone receive money compensation in new paychecks, or to find living quarters and other basic necessities. Hence the necessity to regulate money growth in tandem with the number of new workers entering the labor force. The growing labor force will create the new housing and other necessities to sustain itself. Inflation occurs when corrupt politicians flood the country with "free money" to buy votes for themselves.
If for example money supply growth were held flat within a growing population, new workers would find it difficult to find jobs, let alone receive money compensation in new paychecks, or to find living quarters and other basic necessities. Hence the necessity to regulate money growth in tandem with the number of new workers entering the labor force. The growing labor force will create the new housing and other necessities to sustain itself. Inflation occurs when corrupt politicians flood the country with "free money" to buy votes for themselves.
Inflation is caused when the money supply becomes bloated, or inflated, in proportion to the amount of goods and services being produced, or capable of being produced, in the national economy. Bloated federal budgets is the cause of a bloated money supply, with the [[Treasury Department]] and [[Federal Reserve]] issuing more demand notes to meet [[New spending|new federal spending]].
===Simple supply and demand===
===Simple supply and demand===