Comment: When new units of exchange enter the market...

(See in situ)


When new units of exchange enter the market...

They draw the value from existing units of exchange.

Here is Ron Paul explaining "The Cantillon Effect" that occurs when the money supply is increased (inflated).

This IS a form of taxation, and it does effect paychecks along with savings / pensions and any other future payment made in the currency note effected by the initial transfer of wealth.

http://www.youtube.com/watch?v=D4yBrxmEOkY

Below is a comment I found on another forum:

"printing money and giving it to some special lucky few amounts to theft? Counterfeiting steals value from those who have been disciplined and wise enough to save.

The marketplace is an auction. Imagine you went to an auction with your hard-earned money only find out that other “special” attendees were given the privilege to create their own money on the spot with pieces of paper and a marker. You would obviously only win an item if they decided to let you.

They would also be in control of your final price since they could bid you up to whatever level they desire. It’s wrong on every level and “not one man in a million” can figure it out (to paraphrase Keynes).

I’m sure you've never wondered why gold’s value has remained so constant for thousands of years, but I’ll tell you anyway.

It’s because the above ground supply never gets diluted by more that 1 or 2% a year. The key here is that supply never grows faster than the population. The U.S. monetary base, on the other hand, is up 350% in just the last four years. Just wait until THAT “trickles” into the economy!

You just might find yourself in need of financing to buy a tank of gas."

~Comment by Matthew: February 22, 2013 at 11:32 am

http://www.kereport.com/2013/02/22/cantillon-effect/