[ExI] banks and crash
stathisp at gmail.com
Tue Oct 14 01:53:32 UTC 2008
2008/10/14 gts <gts_2000 at yahoo.com>:
> --- On Mon, 10/13/08, Stathis Papaioannou <stathisp at gmail.com> wrote:
>> Deficit spending while the central bank keeps interest
>> rates unchanged has the effect of increasing the money supply.
> Perhaps, but can you show me the money supply data for, say, 1939 to 1946? And can you show me a positive correlation, (statistically significant or not), between growth of the money supply and growth of GDP for the same period?
> I would like to believe that money supply explains the dramatic increase in GDP during the war, but I've looked around and so far I haven't found the evidence.
A quick search brings up the following, although it seems to have a
"Why then did deficit spending appear to have a powerful effect on
total spending during the war? Because the Fed set a 1% interest rate
and kept the printing presses running full speed to keep it there.
>From January 1942 to January 1946, the monetary base expanded by 79%."
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