The currently available data for M2, a slightly broad definition of money supply, show continued restrictive behavior. That restriction may be caused by the Fed, or it may simply be a lack of willingness of banks to lend. Regardless, the outcome means that inflation is not a risk in the foreseeable future. If anything the risk is for deflation if this continues.

Dr. Rafter is President of Mathematical Investment Decisions, a quantitative research consultancy





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3 Comments so far

  1. Barry Gitarts on April 26, 2010 5:59 am

    Where is the link to the data?

  2. douglas roberts dimick on April 26, 2010 4:55 pm

    Bill, what is your recommendation for considering/defining factors of mass and time (or timing) of deflation relative to quantifying “restrictive behavior”?

    I ask this question relative to discussions and comparisons with second dip post 1929 Crash. As we know, the second one was greater than the first.

    It would seem the issue you identify here appears as a key/leading indicator for any related quantification.



  3. Gary Rogan on April 26, 2010 11:42 pm

    No inflation, no inflation, and then hyperinflation. Hard to do a curve fit for this scenario, and yet it’s pretty likely. We are all Greeks now, except there is no IMF big enough to help us all. Opa!


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