more money chasing the SAME amount of goods?

["William B. Ryan" <w_b_ryan@xxxxxxxxx>]

...it is as clear to anyone that if there is more
money chasing the same amount of goods, prices must
rise.
-------------------------------------
That is correct.  But we say that the amount of goods
being produced is a DEPENDENT function of the
availability of credit money in the broad sense.  An
increase to the quantity of money facilitates the
INCREASE to the quantity of consumable goods to the
point of technical efficiency, which is a term from
engineering not economics.  You questioned its
meaning.  Look it up.

We say within controllable limits because it is a
limiting function, like the terminal velocity of a
falling object where the back force from drag is
increasing with the object's velocity.  Here, the
terminal velocity is analogous to the point of
maximum technical efficiency at the state-of-art in
science and technology, where velocity is taken to be
the rate of production.  Increase to drag but not the
drag itself is analogous to price inflation.  Drag is
analogous to cost reflected in price.

If the goal is zero inflation from the get go, the
actual velocity attained by the falling object is
limited artificially to something short of technical
efficiency.  But if technical efficiency has already
been obtained--the object is falling at a constant
rate--analogous to zero inflation. So we develop
financial techniques like the National Dividend that
allow us to reach technical efficiency if we so
choose as a free people in free markets.

The result in principle is maximum production with
zero inflation.  But real consumer demand is always
less than productive capacity.  We thereby obtain
whatever level of production we choose to consume
short of productive capacity at maximum technical
efficiency for that level of production.  Presently
that level of production is reached only with
continuous waste in resources and labor due to
ignorance of the financial factors involved.

For the first time in history, what is physically
possible becomes financially possible if we so
choose.  What is physically possible is limited only
by the state-of-art in science and technology.
--


---original message---
[snipped]
Pat Gunning, Feng Chia University, Taiwan;
New book: UNDERSTANDING DEMOCRACY
http://nomadpress.com/public_choice/
http://mail.ebtnet.net/~manta/public_choice/

Web pages on Praxeological Economics, Democracy, Taiwan,
Ludwig von Mises, Austrian Economics, and my University
Classes;
http://www.constitution.org/pd/gunning/welcome.htm
and
http://knight.fcu.edu.tw/~gunning/welcome.htm





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