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Strategies & Market Trends : Heinz Blasnik- Views You Can Use -- Ignore unavailable to you. Want to Upgrade?

To: eddieww who wrote (2293)	6/10/2003 10:06:44 AM
From: GraceZ	Read Replies (2) \| Respond to of 4905

What do you mean by "real money supply"? From Dec '72 to Dec '77 M1 went from $250B to $300B. That's (300 - 250)/250/5 = 4%/yr. During that period inflation averaged 8% per year. That's a 8 - 4 = 4% decrease in real money supply per year. What this means is that when inflation rages output is actually falling even though nominally it's rising. Thus, inflation and deflation go hand in hand, or there is always a deflating factor when there's an inflating factor.