The Free Market Center

The Free Market Center

Money Matters Presentation
Deflation Surge (Money Supply Decreases for a Period)

Shoe Production Increases

Shoe Productivity Increases 2.00%/Month
Wheat Productivity Fixed 0.00%/Month

Money Supply Decreases
from month 20 through month 30

 -2.00%/Month

Again production increases steadily throughout the period.

In this second surge scenario money growth surges downward from 0% per month to -2% per month during months 20 through 30. It then returns to no growth.

Money Matters

The rapid reduction in the quantity of money accelerates the natural decline in dollar prices for shoes.

Again, wheat prices fall victim to this monetary change.

We can see from these scenarios how changes in the supply of money always distorts the information given by changes in product prices.
What conclusions can we draw?

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& James B. Berger. All rights reserved.
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© 2010—2020 The Free Market Center & James B. Berger. All rights reserved.
To contact Jim Berger, e-mail: