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Perpetual Growth of Money

Introduction

Many economists advocate totally contradictory concepts about the growth of money. On the one hand, they view inflation as bad. On the other hand, they advocate, for various reasons, the perpetual growth of the money supply. Money inflation cannot be both good and bad at the same time. (I guess they don't see that increasing the money supply causes price inflation).

In this section we will examine some of the reasons given for growing the money supply perpetually and provide evidence as to why these ideas are all completely illogical.

Money Growth to Pay Interest

Somehow, the idea that the supply of money must grow perpetually to pay the interest on money debt has found popular support on the Internet and other media.…

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Money Growth for Stable Prices

Many people, including those who defend the Federal Reserve system, believe that we must have a steadily growing supply of money in order to maintain what they referred to as "stable prices." Read here why the idea of stable prices has little or no merit.

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Money Growth to Prevent Deflation

Many people believe that deflation, regardless of the cause, has a deleterious effect on the economy and must be prevented at all costs. Our current Fed Chairman is definitely one of those people. I will present arguments that show that we have no need to continue to expand the money supply in order to prevent deflation.

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Money & Banking