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

To: Follies who wrote (15702)	12/31/2003 11:09:18 PM
From: JF Quinnelly	Read Replies (1) \| Respond to of 306849

What is strange is the money supply jumped 14% and 21% in the following two years (1982, 1983)! It has to do with monetary velocity. There was a report by the New York Fed discussing this phenomenon. Velocity dropped far faster than the Treasury and the Fed expected it would. When people lost their inflationary expectations for the dollar they did so in a hurry. The willingness to hold dollar balances allowed the money supply to grow without inflation. In contrary fashion, inflationary expectations were rampant in the preceding years. Even though monetary growth was small, people weren't willing to hold dollars. I'm wondering how long it will be before we see that behavior return. From how gold is acting it's already starting.