Comments on economics, mystery fiction, drama, and art.

Wednesday, April 15, 2009

An inflation conundrum

Suppose someone had told you, on June 30, 2008, that M1 would grow, over the next 6 months, at an annual rate of 15.4%. And suppose s/he also told you that the rate of inflation (calculated on the basis of the current month CPI cpmpared with the 12-months-earlier CPI) would fall from more than 5% to -0.5% (that's minus 0.5%). Would you have believed that to be possible?

Well, believe it. That is exactly what has happened.


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