Quote from: QuestionAuthority on March 20, 2014, 03:39:33 PM

Quote from: shawshankinmate37927 on March 20, 2014, 03:29:26 PM

Quote from: QuestionAuthority on March 20, 2014, 02:40:33 PM

The amount of money in a nation's money supply is crucial to the health of its economy. If there is not enough money in circulation, the economy cannot grow.

...

That's just a part of Econ101. It's one of many basic economic principles that very few people here seem to understand.

This is not true, regardless of whether you're a Keynesian or an Austrian economist. The quantity theory of money states that

   M V = P Q, (1)

where M = money supply, V = money velocity, P = price level, Q = real output (goods, service, etc). I think the vast majority of economists agree with this equation, although their opinion may differ on how it should be used.

It is common to associate a growing economy with growing real output, Q (i.e., more goods being produced, more services being used, etc.). If you re-arrange Eq. (1) to solve for real output, Q, you get

   Q = M V / P .

So real output, Q, can grow three different ways (or more properly, it has 3 degrees of freedom):

   1. Money supply, M, can increase (what you said).
   2. Money velocity, V, can increase (e.g., an increase in the rate that bitcoin-days are destroyed)
   3. Price level, P, can decrease (the feared deflationary spiral).