As long as the pool of funding is expanding, monetary expansion can generate an illusion that the central bank can grow the economy. But once the pool of funding stagnates or starts to shrink, this illusion is shattered.
does the above excerpt state that as long as a central bank pool of funding (monetary inflation is taking place, the credit expansion type) is expanding an economy will grow?
generating an illusion? this doesnt make much sense.
if the central bank in the us is the primary driver or at least equal in the expansion of the pool of funding how does it create an illusion if many prices have dropped once adjusted for inflation, real wages have crept up and living standards increased? the central bank is in a sense operating like gold would come out of the ground…i dont think they would say that minters create an illusion.
does monetary expansion generate an illusion or has the economy grown in the ways i have mentioned above with central bank funding-pool expansion.
ie. “Americans today spend '40% less on clothes, 20% less on food, more than 50% less on appliances, about 25% less on owning and maintaining a car’than they did during the early 1970s. Over that same period, Census Bureau tables show, US median household income rose by at least 18% in constant dollars . . .”
http://blog.mises.org/archives/010741.asp
For example, in 1935, when gas prices were 17 cents per gallon and annual disposable income was $466, the cost of 1,000 gallons of gas was 36% of average disposable income. Today, it takes less than 7% of our disposable income to buy 1,000 gallons of gas at the current $2.10 a gallon. The “cheap” gas of the '60s and '70s cost about 12% as a share of income.
http://www.usatoday.com/news/opinion/editorials/2005-05-31-gas-prices-edit_x.htm
or
During the 23 years from 1947 to 1970, the median income of American families increased by an average of 2.8% per year. But from 1970 to 1998, the median income grew by only 0.4% per year.
The difference is considerable. If the previous growth rate had continued, the median income in 1995 would have been 90% greater than it was.
http://www.harrybrowne.org/GLO/FreeTrade.htm
There was economic growth, but it was not spectacular after 1973, when real wages grew stagnant for two decades. The stock market did not outperform general economic growth. After taxes, it did not match economic growth.