tag:blogger.com,1999:blog-6382255864661846735.post303987566021575912..comments2024-02-24T08:45:36.112+00:00Comments on TheFatBigot Opines: Where has all the money gone?TheFatBigothttp://www.blogger.com/profile/17255526385076528633noreply@blogger.comBlogger2125tag:blogger.com,1999:blog-6382255864661846735.post-43116901012334977762008-10-07T23:32:00.000+01:002008-10-07T23:32:00.000+01:00You know I hate to disagree with you Mr W, but (I ...You know I hate to disagree with you Mr W, but (I think!) I took that into account. <BR/><BR/>Prior to the purchase of the car there was £1,000 in circulation. For the purposes of my example it matters not where it came from. Once the seller put the money in the bank and the chain started the amount in circulation went up from £1,000 to £2,600 (or £3,600 if you include the original £1,000). The increase in money supply is 260% (or 360% if you treat the £1,000 in the seller's bank account as "in circulation"). <BR/><BR/>There can be no further increase in the money supply because the retention of +/- 20% limits the aggregate value of further links in the chain. <BR/><BR/>Hence, the example I gave matches the actual increase in money supply you describe. <BR/><BR/>I might be wrong, I certainly presume I am in all things until proved otherwise.TheFatBigothttps://www.blogger.com/profile/17255526385076528633noreply@blogger.comtag:blogger.com,1999:blog-6382255864661846735.post-31147804570034279932008-10-07T20:35:00.000+01:002008-10-07T20:35:00.000+01:00The result is that a single deposit of £1,000 has ...<I>The result is that a single deposit of £1,000 has resulted in an additional £2,600 sloshing around the system</I>???<BR/><BR/>Nice try, but the original £1,000 was taken out of the extra 20% bits that the banks kept in reserve. The fact that man (or indeed woman) who bought Mr P's car had to withdraw £1,000 means that the banks had to sit tight for a few minutes until all the other people in the chain paid it back in again, at which stage they were back to square one.<BR/><BR/>If your analysis were correct, then money supply would have increased by several million per cent over the last few years, rather than just a few hundred per cent.Mark Wadsworthhttps://www.blogger.com/profile/07733511175178098449noreply@blogger.com