Part I here
http://www.stripperweb.com/forum/sho...d.php?t=111950
Thanks to kicking out the Gold Standard and a new way to estimate how much money needs to be printed, X's Economy is operating at a full capacity
50 Baby Sits / Evening
Some smart woman in the community realizes with some minor adjustments, a family can now Baby Sit 2 kids instead of 1.
Now, X's Baby Sitting Supply doubles to 200
However, X's Baby Sitting Demand is Still 100
And since not everyone can go out at the same time, we have a new Supply Demand Equilibrium of 66 (i.e 66 People can go out leaving their kids in 33 homes)
In the next meeting, everyone thanks this woman for this new Wealth being created and they put it into immediate practice.
A month goes by and X discovers that its GDP is still at 50 Baby Sit / Evening and not 66
If you guessed that X needed to print 16 more coupons, you have gotten the concept. And you are way ahead of 99% of the population (including Blog experts running shady web-sites)
So, X goes back and 'Prints' 16 more coupons to get the economy at its full capacity of 66 Baby Sits /Evening
Moral of the Story:
Whenever someone comes up with Smart Ideas, Fed needs to Print Money.
If you think you are smarter than what you were last year, Fed needs to Print Money
If you think kids of current generation is smarter than previous generation, Fed needs to Print Money
Imagine the years following the invention of Printing Press and how many Smart Ideas were created and distributed and the effect it had on Nation's Wealth
Mass Internet is less than 10 years Old. Imagine the potential to generate & distribute smart Ideas. Imagine how much money Fed needs to print
Finally realize generation of smart ideas has nothing to do with how much Gold you have.
Summary,
Productivity goes up ==> Fed needs to Print Money
Unlike some clueless idiots running shady web-sites who think otherwise, Printing Money is not bad.
I'm sure Melonie will point out that all is not hunky-dory. So coming up in the next part: Inflation and Stagflation and a Case When Not to Print Money



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