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08-14-2015, 01:30 AM
The course of an economy is determined by the course of that economy's money supply (broadly determined). The relationship between money growth and nominal GDP growth is presented in the accompanying chart. It is persuasive. Indeed, money, not fiscal policy, dominates.
http://www.cato.org/sites/cato.org/files/wp-content/uploads/chart1_1.jpg
As I listen to all the ad hoc conjectures about the state of China's economy and its near-term prospects, I am astounded to never hear anything said about the most important determinant of nominal economic growth: the money supply. The second chart tells the tale. The picture is not a pretty one. China's money supply growth rate has been slowing down since early 2012. It now is growing at an annual rate of about 10%, which is well below the trend rate of money growth: 17.06%. China is in trouble. Slower money supply growth means that slower nominal GDP growth is already baked in the cake.
http://object.cato.org/sites/cato.org/files/wp-content/uploads/chart2.jpg -- This feed and its contents are the property of The Huffington Post, and use is subject to our terms. (http://start.westnet.ca/newstempch.php?article=terms.html/) It may be used for personal consumption, but may not be distributed on a website.
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http://rc.feedsportal.com/r/234567114535/u/0/f/677045/c/35496/s/48f8b30e/sc/24/rc/2/rc.img (http://rc.feedsportal.com/r/234567114535/u/0/f/677045/c/35496/s/48f8b30e/sc/24/rc/2/rc.htm)
http://rc.feedsportal.com/r/234567114535/u/0/f/677045/c/35496/s/48f8b30e/sc/24/rc/3/rc.img (http://rc.feedsportal.com/r/234567114535/u/0/f/677045/c/35496/s/48f8b30e/sc/24/rc/3/rc.htm)
http://da.feedsportal.com/r/234567114535/u/0/f/677045/c/35496/s/48f8b30e/sc/24/a2.img (http://da.feedsportal.com/r/234567114535/u/0/f/677045/c/35496/s/48f8b30e/sc/24/a2.htm)
http://adchoice.feedsportal.com/r/234567114535/u/0/f/677045/c/35496/s/48f8b30e/sc/24/ach.img (http://adchoice.feedsportal.com/r/234567114535/u/0/f/677045/c/35496/s/48f8b30e/sc/24/ach.htm)http://pi.feedsportal.com/r/234567114535/u/0/f/677045/c/35496/s/48f8b30e/sc/24/a2t.imghttp://pi2.feedsportal.com/r/234567114535/u/0/f/677045/c/35496/s/48f8b30e/sc/24/a2t2.imghttp://feeds.huffingtonpost.com/c/35496/f/677045/s/48f8b30e/sc/24/mf.gif
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http://www.cato.org/sites/cato.org/files/wp-content/uploads/chart1_1.jpg
As I listen to all the ad hoc conjectures about the state of China's economy and its near-term prospects, I am astounded to never hear anything said about the most important determinant of nominal economic growth: the money supply. The second chart tells the tale. The picture is not a pretty one. China's money supply growth rate has been slowing down since early 2012. It now is growing at an annual rate of about 10%, which is well below the trend rate of money growth: 17.06%. China is in trouble. Slower money supply growth means that slower nominal GDP growth is already baked in the cake.
http://object.cato.org/sites/cato.org/files/wp-content/uploads/chart2.jpg -- This feed and its contents are the property of The Huffington Post, and use is subject to our terms. (http://start.westnet.ca/newstempch.php?article=terms.html/) It may be used for personal consumption, but may not be distributed on a website.
http://rc.feedsportal.com/r/234567114535/u/0/f/677045/c/35496/s/48f8b30e/sc/24/rc/1/rc.img (http://rc.feedsportal.com/r/234567114535/u/0/f/677045/c/35496/s/48f8b30e/sc/24/rc/1/rc.htm)
http://rc.feedsportal.com/r/234567114535/u/0/f/677045/c/35496/s/48f8b30e/sc/24/rc/2/rc.img (http://rc.feedsportal.com/r/234567114535/u/0/f/677045/c/35496/s/48f8b30e/sc/24/rc/2/rc.htm)
http://rc.feedsportal.com/r/234567114535/u/0/f/677045/c/35496/s/48f8b30e/sc/24/rc/3/rc.img (http://rc.feedsportal.com/r/234567114535/u/0/f/677045/c/35496/s/48f8b30e/sc/24/rc/3/rc.htm)
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