As Sumner pointed out M2 increased c. 6% during Greenspan's tenure. But the demand for money increased, i.e., the proportion of M1 to M2. It hit an all-time high in April 2008. Banks don't lend deposits. An increase in gated deposits shrinks gDp, shrinks velocity.
The case of the "missing shock"
As Sumner pointed out M2 increased c. 6% during Greenspan's tenure. But the demand for money increased, i.e., the proportion of M1 to M2. It hit an all-time high in April 2008. Banks don't lend deposits. An increase in gated deposits shrinks gDp, shrinks velocity.
Inflation was a concern because the U.S. $ was dropping due to the large trade deficits (primarily the cost of oil).
And regressions don't work because the FED always covered its "Elephant Tracks".