Professor Mark J. Perry's Blog for Economics and Finance
The chart above (click to enlarge) shows the growth rates (from a year ago) for the monetary base and M1 money supply since 2005. M1 has been flat with zero growth for more than 2 years, and the growth in the monetary base has been declining and is now approaching 0% growth. Given these monetary data, is the concern about inflation inflated?
Dr. Mark J. Perry is a professor of economics and finance in the School of Management at the Flint campus of the University of Michigan. Perry holds two graduate degrees in economics (M.A. and Ph.D.) from George Mason University near Washington, D.C. In addition, he holds an MBA degree in finance from the Curtis L. Carlson School of Management at the University of Minnesota. In addition to a faculty appointment at the University of Michigan-Flint, Perry is also a visiting scholar at The American Enterprise Institute in Washington, D.C.
4 Comments:
The price of gold is down more than 15% from the peak. The ten year bond is also forecasting lower inflation. The FOMC is sterilizing its "facilities" lending and holding the monetary base down. Central bankers outside the USA are holding short rates up to target inflation. The dollar has turned on improving data from the states combined with weaker prospects for growth overseas.
Inflation is a late cycle phenomenon. The worst is over. No recession this year. Excess capacity will be cranked back into action in many an industry which will increase Q but hold down P. Real GDP will strengthen the next two quarters.
Noooooo!!
We tried sooooo hard to sell it!! We DID!!
We DID!!!
WE DIIIIIID!?!?
Waaaaaahhhhhhhhhhhhh!!!!!
I don't think we need to worry about inflation because the economy is not over heating. If inflation were being fed by speculative bubbles it would be a problem we should try to solve artifically but adjusting interest rates for example. But if commodity proces are going up because of scarcity or the dollar is going down (finally) because of trade imbalances then those are natural market forces that will correct automatically.
You should take a course on basic economics.
Its money supply vs the demand for money.
You state one half of the equation, the supply, what about money demand.?
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