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Elroy Jetson

09/20/03 9:29 PM

#153217 RE: schloss_1 #153207

The total world supply of gold increases VERY slowly and is relativeley small. This is the very reason that gold holds it's value over very long periods of time.

It is understandable that you find this to be a flaw - you are used to money which constantly falls in value over time.

You point out that quantities of paper money can conveniently be increased by huge amounts to meet any desired goal. Yes of course, and the result is inflation - or more correctly the devaluation of money. The net result achieves nothing -except economic dislocations. So your desire to expand the total money supply contains a major flaw.

If the money supply is fixed, a society which achieves improved productivity will experience falling prices as a result of this increased productivity. This is entirely normal. Expanding the money supply to off-set this productivity merely results in dangerous speculations.