I think both High Quality & Mark raise some interesting points.
I'm with High Quality on his view of 'what if the government printed off more money' - I believe that to be the correct economics explanation, however I can also see things from an intuitive perspective that Mark has explained - it kind of goes inline with my thoughts of 'I wouldn't actually be hurting anyone if I forged $10Million in $100's would I?'
Realistically $10M extra in an economy wouldn't make much different, but in the scenario that High Quality presented he does show how things would change with an extra 1% of money.
Of course, there are pleanty of other effects this would have on the economy, secondary effects as I believe they are called. For example, it would effect exchange rates, interest rates, unemployment - perhaps not so noticably in practise, but in theory, at least.
As far as your first post Mark, I used to think of the problem through your eyes. Then I discovered economics
While economics isn't real world stuff (anything in University isn't for that matter), it does show you how you can break down & analyse how the world works using supply & demand & other models. I actually enjoy this stuff now
Finally, you do raise valid points about HUMAN PSYCHOLOGY - you are correct on this, markets do work for a large part on this.
If you look at stock market crashes, why do they happen? Perception, and human psychology has a lot to do with it.
Same goes for the current housing boom the world is experiencing. Are houses worth as much as some people are paying thesedays? I doubt it - house prices can't rise forever, they're related to wages, and when interest rates go up, as they ultimately will, I think a lot of people will ask themself why did they buy that house!
Whew.. just my
.. but good to actually have an intelligent post on GFY .. thanks Mark
