ClydeR
08-18-2021, 01:39 PM
Did you know about this? M2 is the important number.
https://i.imgur.com/tDPRkHj.png
Picture it. In the 1970s, the Federal Reserve controlled inflation by adjusting interest rates. We started having inflation that persisted despite interest rate increases. The Fed, under the leadership of Paul Volcker, switched from interest rates to the money supply as the primary method of controlling inflation. That didn't work very well, but it did cement in everybody's mind that the money supply was tied to inflation. The more money that exists, the less each unit of money is worth. M1 and M2 numbers were regularly reported on the nightly news. You don't hear that on the news anymore.
Most recently, the Fed has decided that inflation isn't an overarching concern, and now the Fed is going to focus on keeping the unemployment rate low.
Some of us have not forgotten about the connection between money supply and inflation.
https://i.imgur.com/tDPRkHj.png
Picture it. In the 1970s, the Federal Reserve controlled inflation by adjusting interest rates. We started having inflation that persisted despite interest rate increases. The Fed, under the leadership of Paul Volcker, switched from interest rates to the money supply as the primary method of controlling inflation. That didn't work very well, but it did cement in everybody's mind that the money supply was tied to inflation. The more money that exists, the less each unit of money is worth. M1 and M2 numbers were regularly reported on the nightly news. You don't hear that on the news anymore.
Most recently, the Fed has decided that inflation isn't an overarching concern, and now the Fed is going to focus on keeping the unemployment rate low.
Some of us have not forgotten about the connection between money supply and inflation.