Interesting talk - what are your thought ?
And if correct, is there any effect on the PP rationale.....
https://www.youtube.com/watch?v=6Hi4pIjTQ7Q
Velocity of money is constant - Friedman
Moderator: Global Moderator
Re: Velocity of money is constant - Friedman
It was totally reasonable for Friedman to suppose that velocity was relatively constant because that's precisely what he observed when he was alive and studying the issue in his data set.
However, subsequent decades seemed to show his supposition was wrong.
Consequences for the PP? I think it ultimately implies that inflation and deflation are harder to predict than a simple quantity of money theory would imply. Velocity of money is a psychosocial phenomenon. Now we're getting into animal spirits and the question of whether or not people have the gumption, enthusiasm, and confidence to spend.
Non-constant velocity makes a stronger case for investing in the PP, because it implies that the future is even harder to predict than we thought.
However, subsequent decades seemed to show his supposition was wrong.
Consequences for the PP? I think it ultimately implies that inflation and deflation are harder to predict than a simple quantity of money theory would imply. Velocity of money is a psychosocial phenomenon. Now we're getting into animal spirits and the question of whether or not people have the gumption, enthusiasm, and confidence to spend.
Non-constant velocity makes a stronger case for investing in the PP, because it implies that the future is even harder to predict than we thought.
www.allterrainportfolio.com
Re: Velocity of money is constant - Friedman
Thanks Smith,
Just listening to this https://www.youtube.com/watch?v=IATuUPQ ... e=emb_logo while posting.
You may find it interesting
Just listening to this https://www.youtube.com/watch?v=IATuUPQ ... e=emb_logo while posting.
You may find it interesting