Leta i den här bloggen


Knowing M doesn’t help much in predicting P or Q, because V is highly variable

 People’s willingness to borrow, and financial institutions’ willingness to lend, matters as well. 

The circulation of money — its velocity — depends on the actions of a vast array of financial intermediaries and their customers, of which banks are only a small part.

The Fed has targeted money supply only once, during Paul Volcker’s battle with inflation from 1979 to 1982. Even then, the motivation was primarily political: The imperative of slowing money-supply growth provided cover for Volcker to push interest rates up to previously unfathomable levels. Once inflation was defeated, the Fed quickly discarded money supply as a target.

What really matters is the level of short-term interest rates (how high for how long), their impact on financial conditions and how this influences people’s willingness to borrow and spend.

Bill Dudley Bloomberg 28 februari 2023


Inga kommentarer: