Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : US Economic Trend Analysis -- Ignore unavailable to you. Want to Upgrade?

To: gpowell who wrote (2)	8/3/2005 2:53:45 PM
From: gpowell	Respond to of 97

Consider this chart of base money growth since 1959. i10.photobucket.com It can be seen that much of the growth in the monetary base since 1986 has come from increases Currency in Circulation, without however an increase in the Currency in Public Hands. What can account for this? This chart might provide a clue: i10.photobucket.com One possible explanation for the increase in currency is that with a period of disinflation (as indicated by the chart) the US Dollar has once again become a desirable medium of exchange and store of value in foreign markets. The behavior of base velocity is consistent with this view. In fact, much of the seeming disconnect between the CPI index and base growth is explained by this increase in demand for currency, i.e. given that base growth has essentially been zero under Greenspan once the currency component is accounted for, the CPI index is consistent with money growth and the conventional wisdom that CPI OVERSTATES inflation. Thus, there is no need to invent government conspiracies to hide inflation. Links to CPI overstating inflation: google.com