Just What Exactly Do You Mean by “Money,” Buster? #23

I was poking around at the very interesting Divisia measures of money, and came up with the following chart.

Update: Spreadsheet error in original graph. Result: this has little to impart. Never mind. Thanks to Mark Sadowski for pointing it out.

Screen shot 2013-05-26 at 9.09.10 AM

Which has me, once again, asking monetarists the question in the title of this post. For instance: are Treasuries money? How moneyish are they? We have two presumably valid measures here telling wildly different stories in MV=PY World. What’s your story?

The numbers in this chart are purely arbitrary (Divisia measures are just indexes, here divided into GDP, which is in dollars); it’s about the relative changes.

Cross-posted at Angry Bear.






3 responses to “Just What Exactly Do You Mean by “Money,” Buster? #23”

  1. Joshua Wojnilower Avatar

    What are your thoughts on using the Divisia measures to understand macroeconomic cycles from an endogenous money perspective? I ask because the measures appear to be based on the monetarist concept of “moneyness”, yet the broad measures which include Treasuries appear relevant for discussion of NFAs.

  2. Asymptosis Avatar

    @Joshua Wojnilower First, please note the update. Yes, I feel stupid.

    I’m rather skeptical about all monetary aggregate measures vis-a-vis growth and inflation, now that the Fed: 1. pays interest on reserves, 2. Manages interest rates via the IOR/discount window corridor, and 3. manages portfolio preferences via balance-sheet expansion/contraction.