Death and the Money Supply

Via Economic Policy Journal

Charles Wilson emails:

Article Request Time!!!

One rather macabre – and hidden reason – for exploding the M$ is that, if I die from the Chinese Communist Party Virus, my Money Transactions are gone.  If it is a True Pandemic, many other lives are lost and THEIR Transactions are gone.

The Money Supply crashes.

“So…Better to Inflate now and we’ll even it out on the other side…”

Y/N/M?

What is the ABCT explanation (and solution) for this upcoming Catastrophe?

RW response:

Any money all ready printed would go to the estate and passed on so I don’t see how money supply would crash or, necessarily, the number of transactions decline.

But even if for some reason the number of transactions did decline, it has nothing to do with money supply.

You are probably thinking about the Irving Fisher equation PV=MT which shows (sloppily) that a decline in the number of transactions results in deflation. But so what? Falling prices just means it is cheaper for the rest of us to buy things. What is wrong with that?

Second, I don’t believe that many will die from COVID-19.

Bottom line: There is never any good reason to inflate the money supply.

As far as ABCT, Austrian School Business Cycle Theory has nothing to do with the current economic crash.

ABCT is a theory about a specific economic phenomenon, the boom-bust business cycle that results in a distortion of the capital-consumption structure by central bank money printing. The business cycle crash occurs when central bank money supply printing is either dramatically slowed or stopped.

READ ALSO  Insufficient demand now biggest challenge facing business vitality

The money slow-down is not occurring now.

This is a crash caused by government edicts to stop work across the economic spectrum.

Even if there wasn’t a central bank distorting the current capital-consumption structure, we would still have this crash.

RW