Bill,
thank you for the input. I think I will have to compare this on an international basis first to see the bigger picture. What I can say so far is that the US mortgage market is still a yard away from conditions in Japan in the 1980's.
Best regards
Toni Straka | Homepage | 05.25.05 - 11:34 pm | #

David,
having read, and almost understood http://research.stlouisfed.org/ p...Aug_Sep1987.pdf , I will study the matter further and crunch the numbers accordingly. But there remains the question (for me) whether M1 is still a meaningful indicator given the growth of money market investments. I need to compare the long term relation of M1 and M3 first. I could not find much on TVG and M3.
For my post I was relying on information I picked up years ago in talks with the Bundesbank where I was taught to watch M3 in relation to GDP in order to get a better picture of true monetary inflation, a way of thinking that caught on with me for its simplicity considering my thoughts on the reliability of inflation data. Thanks for the mental impetus anyway. Now I am not convinced either - but I still have some gut-feelings about it.
Best regards
Toni Straka | Homepage | 05.25.05 - 11:30 pm | #

Toni,

Why not include mortgage growth in this graph?
Bill | 05.25.05 - 10:00 pm | #

Toni --

It looks to me like you are picking up trend velocity growth, and the effect of low interest rates on velocity in the later part of the picture. I'm not convinced we are seeing a picture of money "sloshing around."
Dave Altig | Homepage | 05.25.05 - 5:46 pm | #