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Strategies & Market Trends : The Residential Real Estate Crash Index -- Ignore unavailable to you. Want to Upgrade?

To: Elroy Jetson who wrote (15685)	12/30/2003 10:56:46 PM
From: GraceZ	Read Replies (2) \| Respond to of 306849

I agree that it is important to know the "value of a dollar over time" or the rate of inflation. Your calculation of dividing the money supply into the nominal GDP doesn't give you the inflation rate. This is the amateur economist's definition of money velocity. There's little correlation between money velocity and inflation. There's little meaning in money velocity. It isn't kept as an economic parameter any more, because several decades ago it was proved to be meaningless by academics after years of general derision from just about everyone. If you divide money supply by GDP, what do you get? A dimensionless number, e.g., so many dollars divided by so many dollars. The units, dollars, cancel. You're left with a dimensionless meaningless number.