The Free Market Center
The Free Market Center
To this point I have modeled steady changes in the supply of money in order to reduce the number of variables that you need to think about. Now, I think you might find it informative to see the effect of surges in money (changes in money growth that only last for a period of time).
By starting and ending with a fixed money supply I hope you can see, on one chart, the influence that changes in the quantity of money have on dollar prices.
In all of the charts on this section I have increased (or decreased) money supply by 2% per month only during the months 20 through 30. I used a large change in money supply to emphasize the effects shown in the curves. The direction of the influence has more importance for sake of learning than the magnitude.
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