{"id":58719,"date":"2021-07-23T13:55:11","date_gmt":"2021-07-23T18:55:11","guid":{"rendered":"https:\/\/olduvai.ca\/?p=58719"},"modified":"2021-07-23T13:55:11","modified_gmt":"2021-07-23T18:55:11","slug":"lacy-hunt-on-debt-and-friedmans-famous-quote-regarding-inflation-and-money","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=58719","title":{"rendered":"Lacy Hunt On Debt and Friedman’s Famous Quote Regarding Inflation and Money"},"content":{"rendered":"
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Lacy Hunt On Debt and Friedman’s Famous Quote Regarding Inflation and Money<\/a><\/h3>\n
Lacy Hunt takes on the widespread belief that sustained inflation is on the way in his latest quarterly review.<\/strong><\/div>\n<\/div>\n<\/div>\n<\/header>\n
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Hoisington Quarterly Review and Outlook 2nd Quarter 2021<\/strong><\/p>\n

Here are some snips to the latest\u00a0at\u00a0Hoisington Management Quarterly Review<\/a>\u00a0(Emphasis Mine).<\/p>\n

Too Much Debt<\/strong><\/p>\n

In highly indebted economies, additional debt triggers the law of diminishing returns. This fact is confirmed when the marginal revenue product of debt (MRP) falls, where MRP is the amount of GDP created by an additional dollar of debt. In microeconomics,\u00a0when debt is already at extreme levels, a further increase in debt leads to an increase in the risk premium on which a borrower will default suggesting that the bank or other lender will not be repaid<\/em>.<\/p>\n

Combining both the falling MRP with a declining loan to deposit (LD) ratio, results in a reduction in the velocity of money. In terms of the impact on monetary activities, a drop in the LD ratio means that more of bank deposits are being directed to the purchase of Federal, Agency and state and local securities in lieu of private sector loans. The macroeconomic result is that funds are shifted to sectors that are the least productive engines of economic growth and away from the high multiplier ones.<\/p>\n

More than thirty years ago, Stanford Ph.D. Rod McKnew demonstrated that the money multiplier, referred to as \u201cm\u201d, is higher for bank loans than bank investments in securities. The money multiplier, which is money stock (M2) divided by the monetary base should not be confused with the velocity of money. The latest trends strongly support McKnew\u2019s analysis.<\/p><\/blockquote>\n

\u2026click on the above link to read the rest of the article\u2026<\/p>\n

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Lacy Hunt On Debt and Friedman’s Famous Quote Regarding Inflation and Money Lacy Hunt takes on the widespread belief that sustained inflation is on the way in his latest quarterly review. Hoisington Quarterly Review and Outlook 2nd Quarter 2021 Here are some snips to the latest\u00a0at\u00a0Hoisington Management Quarterly Review\u00a0(Emphasis Mine). Too Much Debt In highly […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2],"tags":[195,303,426,17651,14648,13390,3650],"class_list":["post-58719","post","type-post","status-publish","format-standard","hentry","category-economics","tag-debt","tag-fed","tag-inflation","tag-lacy-hunt","tag-michael-shedlock","tag-mishtalk","tag-us-federal-reserve"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/58719","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=58719"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/58719\/revisions"}],"predecessor-version":[{"id":58720,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/58719\/revisions\/58720"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=58719"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=58719"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=58719"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}