If Santa Claus were to visit everyone on Earth next Christmas and leave in our stockings an amount of money exactly equal to the amount we already had, there is no doubt that many would rejoice over the sudden increase in wealth. By New Year's day, however, prices would have doubled for everything, and the net result on the world's standard of living would be exactly zero.4 The reason so many people fall for the appealing argument that the economy needs a larger money supply is that they zero in only on the need to increase their supply.
How can the developed world ever resume inflation when the demand for goods gets overcome by debt obligtions? What happens whenn trust in America as lender of last resort fails???
