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<p>[QUOTE="JCB1983, post: 1329002, member: 23885"]I am going to give you a hypothetical situation. Say for instance Iran and other middle-eastern countries decide to implement entitlement programs. They come to the conclusion that the best way to fund these entitlements would be to raise the price of oil. Meanwhile the price for gasoline rises to $5.00 per gallon. A few months down the road the amount of money in circulation is getting less and less. Billions and Billions of dollars are now sitting in middle-eastern bank accounts. We start to see the negative effects in America. Spending begins to decrease. The government reacts by pouring 1 trillion dollars directly into U.S. Banks through quantitative easing. Is this inflation? Does this lead to inflation? Should we agree with Milton Friedman that it is a monetary policy? Should we conclude that it is a reflection or change in pricing? Or is it simply the way in which capital flows to hard assets such as gold? I am confused. I have always assumed that inflation was a monetary issue.[/QUOTE]</p><p><br /></p>
[QUOTE="JCB1983, post: 1329002, member: 23885"]I am going to give you a hypothetical situation. Say for instance Iran and other middle-eastern countries decide to implement entitlement programs. They come to the conclusion that the best way to fund these entitlements would be to raise the price of oil. Meanwhile the price for gasoline rises to $5.00 per gallon. A few months down the road the amount of money in circulation is getting less and less. Billions and Billions of dollars are now sitting in middle-eastern bank accounts. We start to see the negative effects in America. Spending begins to decrease. The government reacts by pouring 1 trillion dollars directly into U.S. Banks through quantitative easing. Is this inflation? Does this lead to inflation? Should we agree with Milton Friedman that it is a monetary policy? Should we conclude that it is a reflection or change in pricing? Or is it simply the way in which capital flows to hard assets such as gold? I am confused. I have always assumed that inflation was a monetary issue.[/QUOTE]
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