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Pastimes : The Justa & Lars Honors Bob Brinker Investment Club

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To: Hank Stamper who wrote (2055)11/10/1998 2:40:00 PM
From: MrGreenJeans  Read Replies (2) of 15132
 
The Money Supply and Interest Rates

Robust money growth, according to my understanding, is relatively more important to promoting growth than lowering interest rates

The money supply and interest rates are directly related. As the money supply increases interest rates decrease and as the money supply decreases interest rates increase. (This rule holds almost 100% of the time except perhaps when there is inflation. There was a time in the early 1980's when inflation was high and higher monetary growth would increase bond rates because of the expectation of even higher inflation but that period was unusual.)
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