> > >Money is not so easy to measure. For example is M0, M1, M2, M3 or some >other > > >measure the best measure of the money stock? some would say that the more > > >'high powered' moneys are best to focus on because they are claimed to >have > > >the most stable velocity. Others would say M3 because it is the best >measure > > >of the monetary holdings in individual and firm asset portfolios. > >I believe that Milton Friedman was the first to prove that inflation >directly correlated with the growth of M2. Before him, economists were >blaming inflation on greed by business and labor, of all things.
Craig: Yes, I remember the same thing. Milton Friedman said that inflation was primarily a monetary phenomenon. I once heard a radio interview with him, and I'm pretty sure he actually used the phrase "too much money chasing too few goods." He might have even coined that phrase, I don't know. Of course, when you put it that way, inflation is a classic example of the age-old dynamic of supply and demand. Obviously it says that price increases can be caused by increases in the money supply that are not matched with increases in productivity. However, if you look at the flip side of the relation, it also suggests that price increases might be caused by decreases in productivity that are not matched with decreases in the money supply! In other words, price inflation could result from decreases in productivity and a constant money supply. This conversation is interesting in light of James Turk's recent observation that the annual rate of growth in the above ground supply of gold tends to stay around 2%, which also tends to match increases in human productivity. That seems directly related, and even right on target in my opinion. Regards, Patrick --- You are currently subscribed to e-gold-list as: archive@jab.org To unsubscribe send a blank email to [EMAIL PROTECTED] Use e-gold's Secure Randomized Keyboard (SRK) when accessing your e-gold account(s) via the web and shopping cart interfaces to help thwart keystroke loggers and common viruses.
