Chapter 17: Monetary Policy
What we will cover in this chapter
- David Fuller has stated for years that “monetary policy trumps most other factors most of the time”.
- The speed with which money moves around the economy (velocity of M2) has been declining across the G7 for more than a decade.
- Central banking 101 dictates that enough money be made available to allow growth to become self-sustaining.
- Therefore central banks can increase the supply of money without the threat of inflation provided the velocity of money continues to trend lower.
- When that situation changes, inflation becomes an increasingly important challenge.
- The yield curve spread for US Treasuries has been a lead indicator of US recessions for more than 30 years. ...