If we were to, for example, double the money supply but also double the quantity of goods, then there would be no price change at all.
FORBES: The Real Impact of Quantitative Easing (Next to Nothing!)
If it adds significant quantity to the existing supply, the already bearish iron ore market may slide further in the absence of a pickup in demand.
You see in your internal visualizer a chart of supply and demand, price and quantity, perhaps depicted as a large X on a graph with two axes.
Traditionally, this calculus focused on factors like market liquidity, the quality and quantity of the local labor supply and efficient regulatory oversight.
The increase in the demand for paper currency and gold not only had a quantity effect on the money supply but it also put upward pressure on the price of gold, which meant that dollar prices of all goods and services had to fall for the relative price of gold to rise.
WSJ: Arthur B. Laffer: Taxes, Depression, and Our Current Troubles
Should the United States now disrupt the British program due to its inability to supply D-5 missiles when and in the quantity called for by bilateral agreements, it could have a catastrophic effect on the viability of the U.K. Trident and severely strain relations between two key allied governments.
The quantity theory of money holds that the money supply, multiplied by the rate at which it circulates (called velocity), equals nominal income.
In fact, prices could fall if the quantity of goods increased more than the money supply (again, please see the posts linked above for a more careful and precise discussion of the factors involved).
FORBES: The Real Impact of Quantitative Easing (Next to Nothing!)
Under a true gold standard, the optimal quantity of money is determined by market forces the money supply spontaneously adjusts to the demand for money, and long-run price stability is achieved.
FORBES: The Federal Reserve's Flawed Approach To Monetary Policy
In other words, in markets with an inelastic supply of homes, the MID will increase the prices of homes rather than their quantity.
FORBES: Heretic Reality: Mortgage Interest Deduction Needs To Be Slashed
There are pilot projects to do this in Tanzania, Kenya and Mozambique, but it will take time before the quantity and quality of their production can make a real dent in the supply problem.
Modern Austrians look askance at monetarists for seeking any increase in quantity, but it says here both schools are flawed for presuming to know at all what the proper supply of dollars should be.
FORBES: Brendan Brown, and The Global Curse Of the Federal Reserve
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