Pay the debt with inflated currency.


When the debt is one of the drivers of inflation, how is inflation going
to oustrip debt? Isn't this like putting the cart before the horse?


Gilligan wrote:
Germany in the 1920's. Simply turn on the printing presses and devalue the
currency.


Good example. Did it work out in the end?


This thread got side tracked somehow. What I started out to say, for 1
ASA/economist point, can anybody answer what economic theory did Friedman
produce? 2 points if you can explain it.

Gilligan wrote:
I don't think he produced any new economic theory but rather contributed
deeper understanding and refinement to old ones.


DSK wrote:
AFAIK he definitely invented something new, but five or six minutes of
googling has failed to produce a reference to it, unless you already know
the specific term.



Gilligan wrote:
Don't you know it?


Yes: velocity

Friedman's work was key in measuring various inputs to the
money supply, quantifying the trend in velocity, and
stabilizing inflation.



He didn't come up with any new theories. He refined old ones.

Actually, I thought he did, but with further research (more
than I really have time for today) I'm beginning to think
you're right.


... Have you ever
read "Human Action" by Ludwig von Mises?

No have you?

.... He was a founder of the Austrian
school of economics, a predecessor of the Chicago school which laid a good
deal of the ground work.

http://en.wikipedia.org/wiki/Ludwig_von_Mises


Never heard of the man before now. Looks like pretty
interesting stuff, thanks for the reference.


Just to make sure, I went back to my old textbook, which
does indeed say that Milton Friedman invented the concept of
velocity, as applied to quantifying the money supply.
However, after digging around quite a lot (interesting
reading but I have a lot of other things that I should be
doing instead right now), I don't think he did invent the
concept of velocity.

http://www.unc.edu/depts/econ/byrns_...les/fisher.htm

In any event, Friedman was the first to reliably use numbers
from the real world to show how the money supply related to
changes in GNP, employment, and inflation, which is
something that economists had pretty much given up on.

Dr. Friedman's work... and economic history since... has
been the basis of relatively stable economic order;
ironically it also shows the desirability of disconnecting
monetary policy from political influence, which is
something else the neo-conservatives ignore when trumpeting
Friedman.

OK, back to real work, dammit!

DSK