Is Sound Money the Answer? with George Gammon (WiM268)
The "What is Money?" Show
What Happened to the Consumer Price Inflation?
From 1870 to 1900, M2 money supply grew by about 400%. Now we also saw real GDP grow by about 300. So real GDP grew almost at the same rate as M2, but we had 45% deflation,. But then you look at 30, 1930 to 1960 roughly, and you had the same M2Money Supply growth. But what's interesting is now, instead of having a 45% deflation, you had about a 75% inflation. And so if you keep M2 consistent, but the only variable you change is real GDP, you see consumer price inflation go up in relationship to the delta between M2 and real GDP.
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