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Economists don’t understand money

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July 21, 2010 – Comments (4)

An absolutely fantastic article by Steve Saville

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Economists don’t understand money
Steve Saville
Jul 20, 2010

http://www.321gold.com/editorials/saville/saville072010.html

4 Comments – Post Your Own

#1) On July 21, 2010 at 1:37 PM, Evlampius (25.86) wrote:

how about HIM Economists dont understand money?

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#2) On July 21, 2010 at 6:42 PM, binve (< 20) wrote:

That's fair

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#3) On July 21, 2010 at 11:09 PM, russiangambit (29.27) wrote:

In my humble opinion Saville doesn't fully understand the fiat money either.The mechanics of fiat money is extremly complicated. And I find it curious that there is no single fiat money theory, every day you hear an argument that this or that person doesn't understand how money works. I wonder who created all this confusion and for what purpose?

The value of fiat money is a functional of its supply and also its velocity, both of which are actually unknown in real time and both of which are controlled/ influenced by FED and Treasury via affecting supply/ demand for money to achieve desired interest rates i.e. the natural equilibrium is distorted and then it is even harder to figure out the value of money. Given the complexity I am surprised the system hasn't fallen apart yet. 

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#4) On July 22, 2010 at 9:03 AM, binve (< 20) wrote:

russiangambit ,

>>In my humble opinion Saville doesn't fully understand the fiat money either.The mechanics of fiat money is extremly complicated. And I find it curious that there is no single fiat money theory

That is probably a fair statement. The problem is that there are so many competing aspects to our fiat money system and how it affects prices. There is a lot of confusion and debate. If you are an 'inflationist' you tend to view it through one lens and if you are a 'deflationist' you tend to view it through another.

I personally try not to be solely in one camp or the other because I think both sides make very good and salient points: http://caps.fool.com/Blogs/more-on-debt-saturation-equals/394221. So either that gives me double vision (positive interference), or it makes me blind (negative interference) :). At any rate, since I think both 'camps' make good points we will have some combinantion of both = either outright stagflation, or a stagflationary recession / depression. .

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