Real Money-Supply...

Article;

 We'd Rather Not

Comment;

Why somebody would increase tax in a recession? Tax on bank deposits means we are encouraging spending and discouraging savings. We do not want people to save we want them to spend more, in a recession. This could be the only plausible answer to the above question. Inflation is active, but low, but deflation is possible in future. It is a performing economy; it has performed in the past. It is one of the best countries on Human Development Index. But money laundering means corruption means people have money but not much or they have a bad habit? The country needs the current level of saving and investment to increase in order to get a higher growth rate which could reduce the level of debt by increasing revenue in the economy. The current level money-supply needs to be increased so that the government can adjust its expenditure. No doubt we need more money not less to cover the debt. Whichever way, foreign investment, too… If Russia withdraws its money from Cyprus the result would be rise in real wealth of the existing money. Because, now goods are more and money is less… What is scarcer is dearer in economics. Prices will fall, interest rates will fall. No doubt we need a higher money-supply. But money supply can be increased in two ways, real money supply and nominal money supply. In real money supply we choose a lower denomination and in nominal we choose a higher denomination. Jointly it is called currency-redenomination.  If nominal supply decreases we can choose to increase real money-supply, using coins or notes. Since the economy is appreciating in real terms we can use metals because now we are richer. I think the European Union should consider giving nations the liberty to mint money in lower denominations. Its money will be safe...