Btw, in case you don't know who Dr. Milton Friedman is, he's a Nobel Laureate of Economic Science and the head of the University of Chicago School of Economics. In other words, a person with some depth of knowledge of the material on which he speaks. He speaks with both a depth and simplicity on complicated subjects that never ceases to amaze. http://en.wikipedia.org/wiki/Milton_Friedman
He absolutely nailed it. In order to try and understand some monetary policies, I graphed the rate of inflation, money supply, price of gold, consumer price index, and fed interest rates. The rate of inflation followed the fed interest rate to a tee. No other factor was so closely tied to inflation, not even the money supply which is the current myth. The one thing people fail to account for is velocity, or how quickly or slowly does money change hands.
Excellent point! The Mark-to-Market rule brought money velocity to a standstill in 2008...until it was modified in April 2009 and the stock market took off.
