Hi PaulM,
I believe you have the right idea!
I subscribe to the theory that growth in M3 = inflation rate. M3 has grown around 70-80% during Clinton's tenure, and currently comes to ~11%. Note that this amounts to ~50-60% above GDP expansion over that same period, or 3-4 times economic growth.
Conventional wisdom says: market rate - fed's bogus cpi = real interest rate, or 7.75% (prime) - ~1.5% (cpi) = ~6.25%. A very high real rate of interest by "conventional wisdom".
The "true" real interest rate = market rate - M3 growth = 7.75% - ~11% = ~ -3.25%. The "true" real rate of interest is, indeed, negative, hence the debt bubble, hence the speculation, hence the "equity mania unprecedented in the history of our Republic."
And, actually, the states used to function as a Republic. Another post for another day... |
