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FED'S POLICY AND HOW WILL GO ON TO 2015

Using the Fisher Equation it can seen how this works.

Between January 2008 and December 2013 the volume of M2 increased by 48% and velocity decreased by 18% and the product of M2*V2 increased 23%. The size of the Real Gross Domestic Product increased 9% and the CPI (a surrogate for the prices of goods and services) increased 11% and the product of GDP and CPI increased 11% (since CPI is not actual prices but a surrogate for it, there is not an actual equality). So [delta]M2*V2 = [delta]P*y.

M2 - 2008 = 7.45 T USD , M2 - 2013 = 11.02 T USD Ratio 2008/2013 M2= 1.48

V2 - 2008 = 1.89 , V2 - 2013 = 1.57 Ratio of 2008/2013 V2 = 0.82

M2*V2 - 2008 = 14.07 T USD , M2*V2 - 2013 =17.03 T USD Ratio of 2008/2013 M2*V2= 1.23

June 5, 2014 · by jgeorgiou · in articles · Edit

Using the Fisher Equation it can seen how this works.

Between January 2008 and December 2013 the volume of M2 increased by 48% and velocity decreased by 18% and the product of M2*V2 increased 23%. The size of the Real Gross Domestic Product increased 9% and the CPI (a surrogate for the prices of goods and services) increased 11% and the product of GDP and CPI increased 11% (since CPI is not actual prices but a surrogate for it, there is not an actual equality). So [delta]M2*V2 = [delta]P*y.

M2 - 2008 = 7.45 T USD , M2 - 2013 = 11.02 T USD Ratio 2008/2013 M2= 1.48

V2 - 2008 = 1.89 , V2 - 2013 = 1.57 Ratio of 2008/2013 V2 = 0.82

M2*V2 - 2008 = 14.07 T USD , M2*V2 - 2013 =17.03 T USD Ratio of 2008/2013 M2*V2= 1.23

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