Of course the price as measured in goods doesn't change because you change the amount of money available: That is why it is inflation rather than an increase in the value of the goods.
I don't understand what you're trying to say there.
In the following, you butchered my reply in a way that allows you to miss the point, so I rearranged things a bit.
Let it, it is not important. And sorry for any butchering, I have tried to keep your quotes as intact, but this system isn't exactly conductive to this.
The "money supply" is a stock. It is something like the sum of all deposits, depending on the definition. How could that possibly affect inflation directly?
Who cares if it affected "directly", whatever that means. You are changing the question, which is : "Will increased money supply increase inflation (or decrease deflation, if you like)" Again, you are arguing a strawman.
Ah, argument from personal incredulity.. (...)
Perhaps my rearranging of the quotes and the added emphasis already helps you to see my point, but let me reiterate in a different way just to be sure.
Think of the price-setting process of an individual supermarket (or other firm) as an algorithm. It has inputs (such as the cost of production, the effective demand seen by the firm, profit motive, behavior of competition, whatever), and it has an output (the price that is ultimately set). My point was that the stock of money is not one of those inputs.
Says who? It is a pretty common practice to simply adjust all prices to account for inflation. Not a perfect method, to be sure, but easy and simple.
However, at least one of those inputs is a flow of money, i.e. the effective demand that has been seen previously.
Says who, and even if true, so what?
You have not argued against that, just continued to claim some causality from an increase of stocks to an increase of flows as I predicted.
Not only claim, but supported the claim; a support which you ignore. But since you are arguing a strawman (the "directly") part, it is hard to get to the truth of the matter. Let me put it in bullet form, then you can tell me where I am wrong.
1. If the sum of deposits (ie., the money supply) increases, there must be some entities who has more money than before.
2. Entities with more money tends to either use or invest money. Let's discount the investment, as that just moves the money to someone else.
3. When some entities use more money, demand increases.
4. Increased demand tends to increase prices.
5. Increased prices leads to increased profitability for the sellers of said goods.
6. Increased profitability leads to more entities with more money.
Repeat from 2, and you can easily see how this leads to increased prices across the board, AKA increased inflation. Or tell me which of 1..7 (7 being the repeat) that you think is wrong.
I've cut out the majority of the rest, because I think the really important point is the following (and yes, I'm also a mathematician - but it's kind of lame of you to bring that up, considering that you really only need high-school arithmetic for these things; I on the other hand apologize for exaggerating about V, I got carried away).
I am shocked that you claim to be a mathematician and makes such a fatal, obvious error in a logical argument. Well, at least you are conceding (as you like to put it) that you were flat out wrong.
No it does not. For instance, assume that M=V=P=Q=1. That us assume that M is increased to 2, then the equation would still be satisfied by V=P=Q=2. Note how nothing is constant with that solution.
Hey! Seems like you're conceding that the economy can quantity-adjust. I think we're getting somewhere :)
No, I was correcting your grave error that satisfying that equation required some of the factors to be constant. That equation is not the real world.
Remember that this part of the discussion was started because of your claim that "$X will just devaluate the currency". Well, turns out that apparently you agree that "$X can also grow the real size of the economy"
I am tired of your straw men. I never wrote that. Please quote me correctly, or not at all.
(perhaps, I think we still haven't really settled on what you mean by X). Once you have realized that, one can obviously start discussions about whether the economy tends to adjust more by increasing production or whether it adjusts more by raising prices.
Again, you are putting up straw men. It is you who are in love with that equation, not I. I wish you would at least decide whether you think it holds or not. I have never claimed it tells everything about economics, the way you treat it... in fact, I never mentioned it. That equation seems to be a balance equation. What it tells you is that if one quantity in the equation is increased, some of the other quantities (and possibly all) must also change (eventually, eventually, I guess). It doesn't tell you anything about which quantities will change for certain actions. For that, you need another "law".
There are two problems with your argumentation here. First of all, you are making a logical mistake yourself by assuming that I meant "the government attempts to sell more bonds" when I really meant "the government sells more bonds".
You cannot be a mathematician. You don't even know what logic is, do you? Anyway, if you having governments doing impossible things, why not have them magic up some gold and sell that? It would be simpler. Or pixie dust, if you prefer. You cannot just define someone to be able to sell, you have to find a buyer.
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