So why does more money=less valuable money? I mean, how can producers know to raise prices when there's more money in circulation?
Becase they can afford to.
Too many dollars chasing too few goods and services.
okay, so how are the price-setters (the producers) aware of how many dollars are chasing their goods?
By seeing how fast they can sell their products. When their stockpile is neither rising nor falling they know they got the right price.Come on think about it. It is easy. You are a restaurant owner. If your place is near empty you lower the prices. If it is unpleasantly crowded you raise them.
how does the federal reserve create monetary inflation?????
i was told this: " inflation is two-fold. Firstly, the Fed pushes new reserves into the system via the OMOs in order to try to bring the FFR down. Secondly the 'commercial banks pyramid loans on the basis of those reserves.' So normally if the Fed increases the monetary base (not typically notes and coins but more commonly by increasing the total quantity of reserves in the system held on account with the Fed itself) by 100 billion you might expect an actual expansion of the overall money supply of maybe 1 trillion (in a very simple example)."
found here http://mises.org/Community/forums/t/7051.aspx
how does the federal reserve create price inflation???
i am not exactly sure this link -- http://blog.mises.org/archives/010741.asp#c604991
say:
"In an online debate with the Atlantic's economics writer, Megan McArdle, Shell observes with disapproval that, when prices are adjusted for inflation, Americans today spend '40% less on clothes, 20% less on food, more than 50% less on appliances, about 25% less on owning and maintaining a car'than they did during the early 1970s. Over that same period, Census Bureau tables show, US median household income rose by at least 18% in constant dollars . . ."
but this link http://www.lewrockwell.com/north/north555.html
say"
"..contraction of economic liberty. There was economic growth, but it was not spectacular after 1973, when real wages grew stagnant for two decades. The stock market did not outperform general economic growth. After taxes, it did not match economic growth."
and dis link http: //www.lewrockwell.com/rockwell/worse-off.html
it say: "Indeed, wages have declined in real terms by 2 percent in the last three years."
written in 2006.
now do you mean how does the federal reserve create price inflation of monetary inflation???
one article seems to indicate that that since the 1970's prices (adjusted for inflation) have dropped..that would seem like a hidden saving s account.
another links says that for two decades after 1973..wages were stagnant, relative to prices i guess??
but after 1993 , during the "... because the Fed chose to open the money spigots, the amounts of new money pouring into the above-mentioned sectors was far greater than could be sustained in a profitable manner...." http://mises.org/daily/1019 period ....i guess things really improved until 2003 or so.
so i dont know who is correct.
someone touting prixiology says that every new unit of money diminishes the purchasing power of all the other moneys.
Supply and demand. The increase in the supply of money makes the value of each unit before it.
Periodically the tree of liberty must be watered with the blood of tyrants and patriots.
Thomas Jefferson
Prices rise because there's more wealth being consumed than being created. People aren't earning money by producing and contributing wealth to the economy. People borrowing money to buy economic goods are not using the savings earned by producers. People are borrowing counterfeit money to consume wealth that producers are entitled to and are simultaneously trying to buy. If producers are not efficient enough to produce enough surplus to meet their own demands as well as demands of spenders of new counterfeit money, shortages of goods will result in prices being bit up.
See my post here:
Here
"The increase in the supply of money makes the value of each unit before it."
if no additional money was added to the supply would the existing money have value....as 'money'?
do you mean adding to the existing money supply makes a new value (an alleged diminshment) to the existing money?