Change Quote by Milton Friedman
“Significant changes in the growth rate of money supply, even small ones, impact the financial markets first. Then, they impact changes in the real economy, usually in six to nine months, but in a range of three to 18 months. Usually in about two years in the US, they correlate with changes in the rate of inflation or deflation." "The leads are long and variable, though the more inflation a society has experienced, history shows, the shorter the time lead will be between a change in money supply growth and the subsequent change in inflation.”
About This Quote
Source Book: "Monetary Trends in the United States and the United Kingdom", 1968
Changes in money supply growth precede market and inflation shifts, with variable lag times.
In simple terms: Money growth affects markets and inflation later.
Key Takeaway
Monitor money supply to anticipate economic changes.
Themes
economics
inflation
monetary policy
Mood
analytical
cautious
Type
academic
informative
When to use this quote
- Central bank policy decisions
- investment strategy
- budgeting forecasts
Key Concepts
Money supply dynamics
lag effects
inflation transmission
Questions to Reflect On
- How can policymakers reduce lag uncertainty?
- What indicators improve forecasting accuracy?
A Different Perspective
Lag length is uncertain, making predictions risky.
