U.S. Core Inflation Expected Over the Next 21 Months (Leading Indicator)

U.S. Core Inflation Expected Over the Next 21 Months (Leading Indicator) This chart shows the U.S. core CPI expected over the next 21 months. It has been quite accurate for more than 20 years. The chart suggests that M2 velocity year-over-year leads U.S. core CPI by 21 months (R² = 0.61 since 1996). You may also…

The Secular Trend for U.S. Interest Rates

The Secular Trend for U.S. Interest Rates This nice chart shows the U.S. 10-year Treasury yield against the natural rate (nominal R-Star) and monetary velocity. In a sense, it explains the secular trend for U.S. interest rates. Picture source: Fidelity Investments

How to Get Inflation?

How to Get Inflation? Mainly, inflation comes from excess money supply growth. There is too much money in the system chasing too few goods and services. Nominal GDP = M x V = P x T M = quantity of money V = velocity of circulation of money P = level of prices T =…

Where Does Inflation Come From?

Where Does Inflation Come From? Mainly inflation comes from excess money supply growth. There is too much money in the system chasing too few goods and services. Over the long term, Nominal GDP = Money Supply x Velocity of Money = Inflation + Real Economic Growth “Inflation is always and everywhere a monetary phenomenon.” –Milton Friedman. You…