I found out recently that one of my friends that I assumed to be of the Austrian school of economic thought believes that we should increase the credit supply at the same pace that GDP increases. I have thought it through and I can’t seem to understand why somebody would believe this could help the economy. As Murray Rothbard said, “Thus, we see that while an increase in the money supply, like an increase in the supply of any good, lowers its price, the change does not–unlike other goods–confer a social benefit.” Are the advocates afraid of deflating prices? Do they not fear those who control the credit supply might abuse their power?
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