tag:blogger.com,1999:blog-6616959642391988608.post3692379264080466601..comments2024-03-28T00:18:25.641-07:00Comments on Calafia Beach Pundit: The confusing connection between M2 and inflation (2)Scott Grannishttp://www.blogger.com/profile/14028519647946868684noreply@blogger.comBlogger13125tag:blogger.com,1999:blog-6616959642391988608.post-41123240077143647862010-01-09T10:50:10.355-08:002010-01-09T10:50:10.355-08:00The concept of core inflation has limited usefulne...The concept of core inflation has limited usefulness because it treats energy prices and food prices as exogenous variables - as if OPEC set the oil price in a smoke-filled room in Riyadh with no reference to economic policy in the US. <br /><br />Another issue is inflation in the prices of goods and services vs inflation in the price of assets.<br /><br />A third issue is how we measure Charleshttps://www.blogger.com/profile/00607057013050715435noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-66817266800660621062010-01-08T12:04:05.370-08:002010-01-08T12:04:05.370-08:00Benjamin, you raised THE most valid point. Budget ...Benjamin, you raised THE most valid point. Budget surpluses of the 90s destroyed US economy by sucking out its financial health. It is as simple as that:<br /><br />1. Budget surplus means that government does not contribute to GDP so it is a drag on growth<br /><br />2. Budget surplus means that government destroys net financial assets in the economy, i.e. assets which represent financial wealthИгры рынкаhttps://www.blogger.com/profile/12001273098690387194noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-46704795637606188202010-01-08T11:29:53.193-08:002010-01-08T11:29:53.193-08:00Игры рынка :
Well, I noticed that we were reducin...Игры рынка :<br /><br />Well, I noticed that we were reducing debt as a fraction of GDP in the UnIted States in the 1990s--and we had a honking job boom. The Dow tripled.<br />Good times. And for everybody, rich and poor. <br /><br />In the entire 2000s, we have had zero job growth, The Dow went nowhere.<br /><br />I cannot prove balancing the federal budget was the cause. But people had Benjamin Colehttps://www.blogger.com/profile/14001038338873263877noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-10914415509266053352010-01-08T09:10:25.903-08:002010-01-08T09:10:25.903-08:00Great post. Thank you!Great post. Thank you!Public Libraryhttps://www.blogger.com/profile/00017383928897945054noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-79043807694899715252010-01-08T09:02:51.770-08:002010-01-08T09:02:51.770-08:00Benjamin, lets skip the issue whether money is spe...Benjamin, lets skip the issue whether money is spent productively or not and let me ask you the following question. Why do you think government debt should be ever repaid? Why do not you treat it as annuity forever and interest payments as a special way to boost aggregate demand? Who needs this debt to be repaid? Pension and insurance companies?! And what will they do with this money? Look for Игры рынкаhttps://www.blogger.com/profile/12001273098690387194noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-55773534261269969292010-01-08T08:55:28.209-08:002010-01-08T08:55:28.209-08:00Well, I am just a guy who makes furniture, and dab...Well, I am just a guy who makes furniture, and dabbles in economics. But inflation?<br /><br />Everything is cheaper than five years ago, at least in Los Angeles. <br /><br />Rents, wages, equipment, All down. <br /><br />A clever fellow buying used equipment could set up a cabinet shop and run it for 50 cents on the dollar compared with three years ago. <br /><br />4 percent inflation? Well, Benjamin Colehttps://www.blogger.com/profile/14001038338873263877noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-15382040790482626452010-01-08T08:21:38.491-08:002010-01-08T08:21:38.491-08:00To be honest, I don't what the best measure of...To be honest, I don't what the best measure of money supply is. But in any event, it's not really necessary. You can tell what supply is doing relative to demand by watching gold, the dollar, the yield curve, etc.Scott Grannishttps://www.blogger.com/profile/14028519647946868684noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-59553099540327561482010-01-08T06:09:06.387-08:002010-01-08T06:09:06.387-08:00I second septizoniom's question: what do you u...I second septizoniom's question: what do you use as a measure of money supply.<br />I try to view the value of money as a balance between money supply and money demand. Gold is the best measure I know of.<br />If M2 is a proxy for demand (which i can accept) is the Fed's reserve credit or balance sheet a proxy for supply?piefarmerhttps://www.blogger.com/profile/04596576632760958227noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-55440321089790452102010-01-08T05:40:52.498-08:002010-01-08T05:40:52.498-08:00Money supply is IRRELEVANT for inflation. Goods su...Money supply is IRRELEVANT for inflation. Goods supply versus goods demand is the only thing which defines whether the price is going up, down or stays where it is. However this simple fact from most basic economics textbooks is very conveniently ignored by the Quantity Theory of Money in favor of some arbitrary, intractable and unmeasurable stuff called money velocity and inflation expectations.Игры рынкаhttps://www.blogger.com/profile/12001273098690387194noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-80793049805015790882010-01-08T04:58:01.166-08:002010-01-08T04:58:01.166-08:00what then is your best measure of money supply?what then is your best measure of money supply?septizoniomhttps://www.blogger.com/profile/14253705209662419429noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-75480016119883568302010-01-08T04:36:33.288-08:002010-01-08T04:36:33.288-08:00I see a 3yr-5yr lag in M2 vs. CPI. Psychology is a...I see a 3yr-5yr lag in M2 vs. CPI. Psychology is also a function of individual spending behavior. It takes about 3yrs for individuals to incorporate inflation trends and is the reason why Volcker had to drive rates up 2x in the early '80's as the first attempt had not convinced individuals that he was serious in controlling inflation psychology. Once society understood this, inflation seekingtraceevidencehttps://www.blogger.com/profile/02479493983076211876noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-36498033051613899822010-01-08T04:26:58.960-08:002010-01-08T04:26:58.960-08:00Scott,
Don't you think Core CPI has truly bec...Scott,<br /><br />Don't you think Core CPI has truly become a meaningless to statistic to guage inflation?<br /><br />Between 2000 and 2006, Housing costs skyrocketed, health insurance costs more than doubled, property taxes exploded, food and fuel prices generally increased yet core CPI was about flat.....and for the most part M2 declined.alstryhttps://www.blogger.com/profile/16025398896639165994noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-47444185352765759512010-01-07T23:33:45.320-08:002010-01-07T23:33:45.320-08:00"the connection between M2 and inflation is n..."the connection between M2 and inflation is not always consistent"<br /><br />And you know why? because inflation is NOT the function of quantity of money but a function of real supply vs real demand. Once people arrive at this simple conclusion taught in basic economics books then the whole world suddenly becomes crisp and clear. And then you start to understand why outsourcing is so Игры рынкаhttps://www.blogger.com/profile/12001273098690387194noreply@blogger.com