Dear C's,
I was looking at some Russian numbers the other day and three things jumped out at me. The first was that the reported M1 for Russia was much lower incomparison to GDP than U.S. M1.
The second was that U.S. M1 as a percentage of GDP has gone down really significantly since the 40's.
I wondered what the relationship between M1 and GDP might be.
The third is a more general observation. Can it be said that inflation is in fact historically more common in failing, contracting economies than in robust "overheated" economies? If we look around the world and at history isn't so-called stagflation the rule rather than inflation associated with growth?
If stagflation is the rule, doesn't that really do damage to Keynesian theory?