Money Growth for Stable Prices

A large number of people argue that the money supply must grow steadily in order to maintain stable prices. We will examine that fallacy.

In a steadily growing economy, in order to keep prices "stable," the money supply must grow at roughly the same rate as economic growth. So goes one of the arguments in favor of a perpetual growth of the money supply. This argument has in fact become the justification for the existence of the Federal Reserve system and its constant expansion of bank reserves.

In articles that will be posted in this space we will examine whether a growing money supply indeed contributes to stable prices, whether the growth of the economy is even measurable, and whether stable prices are even desirable.

Articles to come