Monetary Mystery?
Submitted by CARPE DIEM
The top chart above shows the annual percentage changes in the monthly monetary base from 2002-2008. The bottom chart shows M1 (red) and the monetary base (blue) from 2002-2008.
Clearly, the growth rate of the monetary base (”high-powered money”) has been slowing, and both M1 and the monetary base have been flat for three years.
Q: How can inflation be a problem when M1 has been flat for three years, and the growth rate of the monetary base has been declining for six years?
Visit 1800blogger to see all of our industry leading blogs.
Are you an investor? Have something you want to say about the economy? Register on Econoimist Blog now and get published within minutes. Before posting, it is recommended that you review our posting guidelines.
