Barnett's Divisia aggregates does not explain velocity. Therefore, it does not explain N-gDp.
The FEB #s are out and show a contraction. N-gDp is still too high.
The 'thermostat' began to work because of the impoundment of monetary savings in the payment's system. Contrary to economists, banks don't lend deposits, deposits are the result of lending. That's why Dr. Philip George's equations worked.
With all due respect I wonder about the causation here. You use the NGPD and M data to derive velocity curves. How can you say that the velocity caused anything when it is not independently measured data? Velocity numbers just portray the ongoing, fluctuating disconnection between money supply and GDP. I agree that stable NGDP growth is a good goal for government inflation policy, but velocity is not an actionable data trend. It is just an explanatory concept after policy and policy's response occur. That's why central banks set interest rates nowadays, not money supply in their goal of stabilizing the economy.
Gary, the thermostat analogy is not about causation! If any thermostat is working well, what you expect to see is the thermostat react appropriately to changes in the outside temp, so that the room temp does not shoot in one direction or another! Also, back in Jan 71 Friedaman in A Monetary Theory of Nominal Income (JPE) said: "Velocity can be whatever people want"!
Barnett's Divisia aggregates does not explain velocity. Therefore, it does not explain N-gDp.
The FEB #s are out and show a contraction. N-gDp is still too high.
The 'thermostat' began to work because of the impoundment of monetary savings in the payment's system. Contrary to economists, banks don't lend deposits, deposits are the result of lending. That's why Dr. Philip George's equations worked.
With all due respect I wonder about the causation here. You use the NGPD and M data to derive velocity curves. How can you say that the velocity caused anything when it is not independently measured data? Velocity numbers just portray the ongoing, fluctuating disconnection between money supply and GDP. I agree that stable NGDP growth is a good goal for government inflation policy, but velocity is not an actionable data trend. It is just an explanatory concept after policy and policy's response occur. That's why central banks set interest rates nowadays, not money supply in their goal of stabilizing the economy.
Gary, the thermostat analogy is not about causation! If any thermostat is working well, what you expect to see is the thermostat react appropriately to changes in the outside temp, so that the room temp does not shoot in one direction or another! Also, back in Jan 71 Friedaman in A Monetary Theory of Nominal Income (JPE) said: "Velocity can be whatever people want"!