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Reply #26: The Wiemar republic example was not an example of the money supply but of general hyperinflation [View All]

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bossy22 Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Nov-28-11 07:04 PM
Response to Reply #24
26. The Wiemar republic example was not an example of the money supply but of general hyperinflation
where money became almost worthless. Thats would happen if you increased the M2 overnight by 8x.

Also you have to understand that the fed didnt give out 8 Trillion at once- its all revolving lines of credit. Many of these loans were repaid the next day, else you would see a massive increase in M2- which there wasnt.

Paying off everyones money would increase M2 by an astronomical amount. This is what would lead to hyperinflation (indirectly). The only way such could work theoretically is that if all the mortgages in the U.S. got transferred onto the Fed's balance sheet making it a liability of the federal reserve. Then the M2 would increase gradually over time so you wouldnt see hyperinflation, but still see significant and painful inflation
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