Vi is a “residual calculation – not a real physical observable and measurable statistic.” Income velocity may be a “fudge factor,” but the transactions velocity of circulation is a tangible figure.
I.e., income velocity, Vi, is endogenously derived and therefore contrived (N-gDp divided by M) whereas Vt, the transactions’ velocity of circulation, is an “independent” exogenous force acting on prices.
Vi has at times moved in the opposite direction of Vt for considerable periods of time.
"The only relevant test of the validity of a hypothesis is comparison of prediction with experience." – Nobel Laureate Dr. Milton Friedman
From the standpoint of the entire payment’s system, from the standpoint of the economy, commercial banks never loan out, and can’t loan out, existing funds in any deposit classification (saved or otherwise), or the owner’s equity, or any liability item. Every time a DFI makes a loan to, or buys securities from, the non-bank public, it creates new money - demand deposits, somewhere in the payment’s system. I.e., deposits are the result of lending and not the other way around.
The S&L crisis was the May 1980 predicted result. The GSEs were also predicted in May 1980 to supplant Savings and Loan Associations' lending. Bank debits went negative for the first time during the 4/1991 - > 11/1992; the 7/1990 –> 3/1991 recession.
I.e., the DIDMCA destroyed the thrifts, which expeditiously invested savings.
So, the "Great Moderation" was due to an increasing volume and increasing proportion of bank deposits being saved.
The GFC was also predicted in May 1980, due to Greenspan's 40% decline in required reserves (the decline was predicted). Leland Pritchard is the smartest man that ever lived.
UDK 1974 Dr. Leland Pritchard: "During the decade ending in 1964, money flows increased at an annual compounded rate of about 6 percent. In the nine years since 1964, the increase was more than 13 per cent, and in 1972-73, nearly 30 percent. Because R-gDp and presumably, the volume of goods and services offered in the markets, was increasing at a rate of less than 5 per cent, it should have been no surprise that there was an intensification of our chronic rates of inflation to devastating levels."
The "Great Inflation" was not as Alan Blinder explained. It was due to the "monetization" of time deposits and the FED's operating procedure (where the pressure was always on the top side of the brackets).
Vi is a “residual calculation – not a real physical observable and measurable statistic.” Income velocity may be a “fudge factor,” but the transactions velocity of circulation is a tangible figure.
I.e., income velocity, Vi, is endogenously derived and therefore contrived (N-gDp divided by M) whereas Vt, the transactions’ velocity of circulation, is an “independent” exogenous force acting on prices.
Vi has at times moved in the opposite direction of Vt for considerable periods of time.
"The only relevant test of the validity of a hypothesis is comparison of prediction with experience." – Nobel Laureate Dr. Milton Friedman
From the standpoint of the entire payment’s system, from the standpoint of the economy, commercial banks never loan out, and can’t loan out, existing funds in any deposit classification (saved or otherwise), or the owner’s equity, or any liability item. Every time a DFI makes a loan to, or buys securities from, the non-bank public, it creates new money - demand deposits, somewhere in the payment’s system. I.e., deposits are the result of lending and not the other way around.
The S&L crisis was the May 1980 predicted result. The GSEs were also predicted in May 1980 to supplant Savings and Loan Associations' lending. Bank debits went negative for the first time during the 4/1991 - > 11/1992; the 7/1990 –> 3/1991 recession.
I.e., the DIDMCA destroyed the thrifts, which expeditiously invested savings.
So, the "Great Moderation" was due to an increasing volume and increasing proportion of bank deposits being saved.
The GFC was also predicted in May 1980, due to Greenspan's 40% decline in required reserves (the decline was predicted). Leland Pritchard is the smartest man that ever lived.
re: "he applied a monetarist theory that advocated the setting of strict targets to control the supply of money"
The NYT is obviously wrong. And Anderson's reconstruction of RRs was wrong.
UDK 1974 Dr. Leland Pritchard: "During the decade ending in 1964, money flows increased at an annual compounded rate of about 6 percent. In the nine years since 1964, the increase was more than 13 per cent, and in 1972-73, nearly 30 percent. Because R-gDp and presumably, the volume of goods and services offered in the markets, was increasing at a rate of less than 5 per cent, it should have been no surprise that there was an intensification of our chronic rates of inflation to devastating levels."
The "Great Inflation" was not as Alan Blinder explained. It was due to the "monetization" of time deposits and the FED's operating procedure (where the pressure was always on the top side of the brackets).
re: "While velocity growth remained stable, money supply growth was significantly constrained"
Your Vi is obviously wrong.