Inflation is determined b y monetary flows, volume times transaction's velocity, where M*Vt equals P*T in American Yale Professor Irving Fisher's truistic: "equation of exchange" (where N-gDp is a subset and proxy).
Link: “Extrait du Bulletin de ISI of 1937”. - History and forms. Irving Fisher (1925) was the first to use and discuss the concept of a distributed lag.
In a later paper (1937, p. 323), American Yale Professor Irving Fisher stated that the basic problem in applying the theory of distributed lags:
“is to find the ’best’ distribution of lag, by which is meant the distribution such that … the total combined effect [of the lagged values of the variables taken with a distributed lag has] … the highest possible correlation with the actual statistical series … with which we wish to compare it.”
...Thus, we wish to find the distribution of lag that maximizes the explanation of “effect” by “cause” in a statistical sense”.
To quote economist John Gurley, “Money is a veil, but when the veil flutters, real-output sputters.”
That's the beginning of the transition from clerical processing to electronic processing. The process of monetizing time (savings) deposits within the payment's system began in the early 1960’s with Citicorp’s Walter Wriston inventing the negotiable CD - which drew funds out from all over the world, indeed from the international, unregulated, E-$ banking market (with an ever-mounting and inflationary, self-reinforcing depreciating currency effect, as the volume of E-$s directly impacts U.S. prices).
Wriston “presided over an encyclopedic range of innovations - among them negotiable CDs, term loans, syndicated loans, floating-rate notes and currency swaps-that ended forever the moribund banking of the 1950s and ushered in our razzle-dazzle age of finance” #2. Wriston “masterminded the bank’s explosive change from stagnant deposit-and–loan institutions to a global purveyor of financial resources.”
Consequently, banks began to manage their liabilities, and corporations began managing (minimizing) their non-interest-bearing cash balances. Consequently, banks began systematically, to buy their liquidity, instead of following the old-fashioned practice of storing their liquidity.
re: "The record of economic performance shows serious blemishes, particularly the inflation since 1966"
Bank's don't loan out deposits. That's when the banks began to outbid the nonbanks for loan funds, i.e., the 1966 Savings and Loan Association Credit Crunch (where the term originated). So, just as Dr. Leland J. Prichard predicted, it would take increasing infusions of Reserve Bank credit to generate the same inflation adjusted dollar amounts of GDP.
See: Paul F. Smith "Optimum Rate on Time Deposits." The Journal of Finance, December 1962, 622-633. His conclusion "Rates on time deposits currently being paid by banks are above the optimum rate and may be above the break-even rate".
Inflation is determined b y monetary flows, volume times transaction's velocity, where M*Vt equals P*T in American Yale Professor Irving Fisher's truistic: "equation of exchange" (where N-gDp is a subset and proxy).
Link: “Extrait du Bulletin de ISI of 1937”. - History and forms. Irving Fisher (1925) was the first to use and discuss the concept of a distributed lag.
In a later paper (1937, p. 323), American Yale Professor Irving Fisher stated that the basic problem in applying the theory of distributed lags:
“is to find the ’best’ distribution of lag, by which is meant the distribution such that … the total combined effect [of the lagged values of the variables taken with a distributed lag has] … the highest possible correlation with the actual statistical series … with which we wish to compare it.”
...Thus, we wish to find the distribution of lag that maximizes the explanation of “effect” by “cause” in a statistical sense”.
To quote economist John Gurley, “Money is a veil, but when the veil flutters, real-output sputters.”
re: "The story begins in 1961"
That's the beginning of the transition from clerical processing to electronic processing. The process of monetizing time (savings) deposits within the payment's system began in the early 1960’s with Citicorp’s Walter Wriston inventing the negotiable CD - which drew funds out from all over the world, indeed from the international, unregulated, E-$ banking market (with an ever-mounting and inflationary, self-reinforcing depreciating currency effect, as the volume of E-$s directly impacts U.S. prices).
Wriston “presided over an encyclopedic range of innovations - among them negotiable CDs, term loans, syndicated loans, floating-rate notes and currency swaps-that ended forever the moribund banking of the 1950s and ushered in our razzle-dazzle age of finance” #2. Wriston “masterminded the bank’s explosive change from stagnant deposit-and–loan institutions to a global purveyor of financial resources.”
Consequently, banks began to manage their liabilities, and corporations began managing (minimizing) their non-interest-bearing cash balances. Consequently, banks began systematically, to buy their liquidity, instead of following the old-fashioned practice of storing their liquidity.
re: "The record of economic performance shows serious blemishes, particularly the inflation since 1966"
Bank's don't loan out deposits. That's when the banks began to outbid the nonbanks for loan funds, i.e., the 1966 Savings and Loan Association Credit Crunch (where the term originated). So, just as Dr. Leland J. Prichard predicted, it would take increasing infusions of Reserve Bank credit to generate the same inflation adjusted dollar amounts of GDP.
See: Paul F. Smith "Optimum Rate on Time Deposits." The Journal of Finance, December 1962, 622-633. His conclusion "Rates on time deposits currently being paid by banks are above the optimum rate and may be above the break-even rate".