Lilya, your major might very well be the problem! You were almost certainly taught a mixture of classical economic theory and "Keynesian" economic theory. Mike, Andy, and I picked up Austrian economic theory. Most of what each school considers relevant, the other considers irrelevant!
For example, classical economic theory posits the existence of something called "general inflation", where all prices are rising. Austrian economic theory attributes that to a side-effect of the debasement of the currency, and furthermore, states that the side-effect doesn't always show up until long after the money supply has risen.
For example, during the "Roaring 20s", prices rose only modestly. That's because much of the new money went into asset speculation--so in other words it wasn't causing the price of bacon to rise, but rather the price of radio stocks--and also some of it went into producing over-capacity (there were something like 100 or so car manufacturers), which ironically helped keep consumer prices steady.
So both during the 1920s, and also during the 1990s, the supposed "lack of inflation" was interpreted as a signal that it was OK to keep inflating the money supply. The problem is the model was dead-wrong. It didn't create dramatic consumer price inflation, but it cause misallocation of resources. That's the part they always miss.
Another one is the "wage-price spiral", which does not exist. A lot of the inside-the-beltway types are at a loss to explain how it is possible to have rising consumer prices and stagnant or falling wages.
most of the time I can barely follow 10% of what you guys talk about
So ask questions already. :D
