Re:The euro has tumbled near parity to the US dollar
by panarky on Monday July 11, 2022 @07:40PM
(#32063661)
When your model of how things work predicts one thing, and then the exact opposite thing happens, it's a good time to question what might be wrong with your model. (Hint: "printing money" doesn't automatically make money worth less.)
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Re:The euro has tumbled near parity to the US dollar
by ghiculescu on Monday July 11, 2022 @07:48PM
(#32063728)
> "printing money" doesn't automatically make money worth less.)
Why not? Intuition says that it should. So I think that’s what GP is trying to understand.
It seems like you’ve substituted their model with yours but haven’t explained how yours works.
Re:The euro has tumbled near parity to the US dollar
by JumpCrisscross on Monday July 11, 2022 @07:56PM
(#32063809)
> Intuition says that it should. So I think that’s what GP is trying to understand.
Velocity [1].
Ignoring it is like sticking a water wheel in the ocean and asking why it doesn’t turn given the depth. Quantity doesn’t turn it. Flow does. And that depends on more than how much water is present.
Re:The euro has tumbled near parity to the US dollar
by panarky on Monday July 11, 2022 @08:50PM
(#32064218)
Haven't heard the water wheel in the ocean analogy, and I love it! Thank you!
There's a very simple mathematical identity: MV=PQ
M is money supply, V is velocity, P is price level, and Q is all goods and services.
So if the economy produces the same amount of stuff (Q is constant) and if V falls in the inverse ratio as the increase in M, then the price level will not change.