Yes, ahahaha (or whatever) is writing like a very lucid monetarist. Long ago I read the Schwartz and Friedman "Monetary History of the United States" at least twice, and became completely convinced, but I don't think monetarists have ever adequately responded to the real possibilities for accelerating productivity that can create goods and services even faster than the Fed (at times) creates money.
I am still trying to figure where various people get rates like 15% or 16% for either M2 or M3 growth. The annualized Fed figures are very high, but still around 12-13%. Let me see how the following formats:
MONEY STOCK AND DEBT MEASURES
Percent change at seasonally adjusted annual rates
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M1 M2 M3 Debt
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3 Months from July 1998 TO Oct. 1998 2.5/ 12.0/ 13.5/ 5.9
6 Months from Apr. 1998 TO Oct. 1998 -0.4/ 8.3/ 9.4/ 6.0/
12 Months from Oct. 1997 TO Oct. 1998 1.6/ 8.5/ 10.8/ 6.2/
Thirteen weeks ending
November 9 , 1998
from thirteen weeks ending:
Aug. 10, 1998 (13 weeks previous) 0.1/ 10.0/ 10.6
May 11, 1998 (26 weeks previous) -0.9/ 7.8/ 9.1
Nov. 10, 1997 (52 weeks previous) 0.8/ 8.0/ 10.4
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Not so good format.
But the successions of percentages are M1/M2/M3/Debt.
As I recall, the goods/services inflation tends to appear about two years after monetary inflation. So maybe the Fed is counting on some kind of moderate decline in equities, or at least stagnation, to dampen inflation before it can start, along with the effects of cheaper imports from China, etc, and the continuing mass suicide of oil producing nations.
But they will have to pull in on the money at some point or they really will get 8% inflation, which they don't want.
I was just re-reading David Dreman's 1977 analysis of the 1972 bubble; what we have is bigger, and at some point will take on a downward dynamic of its own independent of Fed action.
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