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I'm assuming that's Swedish M3 data.  Don't know what M3 represents at the Bank of Sweden, but if it's the same as the American version, it's not a useful indicator on growth and inflation.  M2 is the better one.  M3 seems to exist primarily to fuel ShadowStats subscriptions.

(Note:  Doesn't mean M2 causes either.)

Inflation is, of course, not always and everywhere a monetary phenomenon.  In fact, the bad (non-hyperinflationary) bouts of it almost always seem to me to be about supply shocks.  Once the resource shock eases, inflation eases.

To be fair, Friedman acknowledged that monetarism didn't pan out.

The real problem is that the rise of Friedman resulted in fraudulent discrediting of Keynes, a quiet Friedman exit, and the real counter-revolution -- the New Classicals, led by Lucas and Prescott.  Their credibility rested in part on (thanks to Friedman's notoriety) originating at Chicago.

While the field has obviously had its share of assholes throughout history (eg, Samuelson), the New Classicals were the Gingrich Republicans of economics.

Be nice to America. Or we'll bring democracy to your country.

by Drew J Jones (pedobear@pennstatefootball.com) on Thu Jan 23rd, 2014 at 08:06:12 PM EST
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