GST
If you keep looking you might eventually find somebody who is willing to sign your "inflation is money supply" petition. Good luck!
Message 23095662
Good Idea!
Thanks
Please consider an article by Fed Member Gary H. Stern
President Federal Reserve Bank of Minneapolis .
Written in 1995 but as timeless then as it is now.
One of the few topics about which most macroeconomists agree is that inflation is first and foremost a monetary phenomenon.3 It results from a long-term pattern of money creation which is excessive relative to the economy's ability to produce real goods and services. Further, there is widespread agreement that the supply of money is determined by the central bank in the long run.
minneapolisfed.org
Check this out from 1997
minneapolisfed.org
But in an inflationary environment, it may be difficult for individual decision makers to distinguish between inflation on the one hand and a change in relative prices on the other.
......
To be sure, all this talk about the benefits of low inflation would not matter much if the Federal Reserve, through monetary policy, cannot achieve and maintain low inflation. Fortunately, on this subject there is considerable agreement among business economists, academics and practitioners. Most agree that inflation is first and foremost a monetary phenomenon; it results from a long-term pattern of money creation which is excessive relative to the economy's ability to produce goods and services. Further, there is agreement that the supply of money is determined by the central bank in the long run. Thus, with appropriate policy, the Federal Reserve can achieve and maintain low inflation—it should be expected to do so and should be held accountable for doing so. The operational responsibility of the Federal Reserve, then, is to provide for long-run, expansion of the money supply consistent with low inflation.
Hmmm Let's see what the ECB says....
ecb.int
Speech by the President of the European Central Bank, Dr. Willem F. Duisenberg, at the Institute of European Affairs on 10 November 1998 in Dublin
The prominent role of money in the ESCB's monetary policy strategy
Let me now turn to the role money will play in the ESCB's stability-oriented monetary policy strategy.
Ultimately, inflation is a monetary phenomenon.
What was the ECB saying in 1999?
Good question - Note to that this was by Issing!
ecb.int
The ECB's monetary policy in the context of globalisation
Speech by Professor Otmar Issing Member of the Executive Board of the European Central Bank at the conference "Weltachsen", organised by the Center for European Integration Studies, the Center for Development Research and federal city of Bonn, Bonn, 11 November 1999.
The other two elements of the Eurosystem's strategy are what we call the two "pillars". The first of these is a prominent role for money. The second is a broadly based assessment of the outlook for price developments.
Given that inflation is ultimately a monetary phenomenon, monetary aggregates are a natural first choice as a "nominal anchor" and guidepost for monetary policy.
Now let's see if we can make Issing just a little more clear.
The ECB’s Two Pillars - A Success
Otmar Issing
project-syndicate.org
The long-run connection between money and price developments is among the most robust economic relationships. “Inflation is always and everywhere a monetary phenomenon”. This statement by the late Nobel laureate Milton Friedman has never lost its validity.
It seems to me the more you differ from Issing and Stern and Duisenberg and Friedman and Kasriel as to what inflation is, the more divorced from reality you are.
PS - I stopped looking once I found Issing - but I hazard a guess those will do for now. Any more feet you want to stick in your mouth or is two all that fit at once?
Mish |
