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It seems like the M2 velocity has been on a very low level in recent years, which compensated the ever growing money supply for price inflation(MV=PQ)?
However the correlation of M2 velocity and CPI diverged after 1990, anybody know the reason why? @Crypto_Macro @ATabarrok
However the correlation of M2 velocity and CPI diverged after 1990, anybody know the reason why? @Crypto_Macro @ATabarrok
My initial assumption on CPI inflation stayed relatively low after major QE is due to low money velocity (MV=PQ, Q usually is stable). But I’m puzzled now why started 1990 even tho in period when V was high the CPI can still stay low
a few other hypothesis are :
globalization + oversupply (especially in China and later service and goods got imported into US to offset CPI growth?)
And internet is deflationary in general - increasing productivity, global access of cheap intelligent workers etc?
globalization + oversupply (especially in China and later service and goods got imported into US to offset CPI growth?)
And internet is deflationary in general - increasing productivity, global access of cheap intelligent workers etc?
