Comment: Thanks for bringing up Mises

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Thanks for bringing up Mises's been oh so long since I have read him, I've forgotten how eloquent he can be.

I wasn't necessarily talking about the Quantity Theory of Money as much as The Quantity of Money vs the Demand for Money which Mises addresses on page 137.

When Mises is addressing The Quantity Theory of Money he is talking about the "subjective value of money" and not the objective exchange value when a increases in the money stock occurs.

"The demand for money and its relations to the stock of money forms the starting-point for an explanation of fluctuations in the objective exchange-value of money. Not to understand the nature of the demand for money is to fail at the very outset of any attempt to grapple With the problem of variations in the value of money."

"In the history of money a particularly important part has been played by those variations in its objective exchange-value that have arisen in consequence of an increase in the stock of money while the demand for it has remained unchanged or has at least not increased to the same extent. These variations, in fact, were what first attracted the attention of economists; it was in order to explain them that the Quantity Theory of Money was first propounded."

"In whatever way we care to picture to ourselves the increase in the stock of money, whether as arising from increased production or importation of the substance of which commodity money is made, or through a new issue of fiat or credit money, the new money always increases the stock of money at the disposal of certain individual economic agents. An increase in the stock of money in a community always means an increase in the money incomes of a number of
individuals; but it need not necessarily mean at the same time an increase in the quantity of goods that are at the disposal of the community, that is to say, it need not mean an increase in the national dividend. An increase in the amount of fiat or credit money is only to be regarded as an increase in the stock of goods at the disposal of society if it permits the satisfaction of a demand for money which would otherwise have been satisfied by commodity money instead, since the material for the commodity money would then have had to be procured by the surrender of other goods in exchange or produced at the cost of renouncing some other sort of production. If, on the other hand, the non-existence of the new issue of fiat or credit money would not have involved an increase in the quantity of commodity money, then the increase of money cannot be regarded as an increase of the income or wealth of society."

"An increase in a community's stock of money always means an increase in the amount of money held by a number of economic agents, whether these are the issuers of fiat or credit money or the producers of the substance of which commodity money is made. For these persons, the ratio between the demand for money and the stock of it is altered; they have a relative superfluity of money and a relative shortage of other economic goods. The immediate consequence of both
circumstances is that the marginal utility to them of the monetary unit diminishes. This necessarily influences their behavior in the market. They are in a stronger position as buyers. They will now express in the market their demand for the objects they desire more intensively than before; they are able to offer more money for the commodities that they wish to acquire. It will be the obvious result of this that the prices of the goods concerned will rise, and that the objective exchange-value of money will fall in comparison. But this rise of prices will by no means be restricted to the market for those goods that are desired by those who originally have the new money at their disposal. In addition, those who have brought these goods to market will have their incomes and their proportionate stocks of money increased and, in their tum, will be in a position to demand more intensively the goods they want, so that these goods
will also rise in price. Thus the increase of prices continues, having a diminishing effect, until all commodities, some to a greater and some to a lesser extent, are reached by it."

"The increase in the quantity of money does not mean an increase of income for all individuals. On the contrary, those sections of the community that are the last to be reached by the additional quantity of money have their incomes reduced, as a consequence of the decrease in the value of money called forth by the increase in its quantity; this will be referred to later. The reduction in the income of these classes now starts a counter-tendency, which opposes the tendency to a diminution of the value of money due to the increase of income of the other classes~ without being able to rob it completely of its effect."

It's like read poetry isn't it......So the question remain....what do you think they are inflating? The answer should have been the money supply.....and the resulting price increases are the result. That's the only thing I was after......can we now agree?

"Before we can ever ask how things might go wrong; we must first explain how they could ever go right"