inflation equation

Discussion in 'Forex Trading' started by forexcranium, Apr 10, 2007.

  1. wanted to ask, has anyone heard of this new "Inflation Equation" ?

    In the past, the roots of inflation have stemned from too much money chasing too few goods. The mathematical equation that economists have used is the Equation of Exchange - prices are directly linked to the amount of money in circulation and the speed at which we spend it. Basically, the faster we print money than the economy grows - the value of the dollar falls. So apparently there is this "new model" that looks at inflation...and I'm wondering if anyone has caught wind of it?
     
  2. AH...so here it is:

    "A new formula emerges from an economic model being developed by the federal reserve bank in of dallas. it reveals something the traditional doctrine misses: inflation varies inversely with growth not only in the domestic economy but also with growth in other countries>

    So apparently - the importance of domestic/global growth depends on four factors:

    country size
    home bias
    ease of substitution
    production tradeoffs


    Gonna keep reading...see what else gives
     
  3. Mmmm...just out yesterday, the dollar edged higher against the euro - part of that came from the strong job report last week. Against the yen it continued to match its six-week high of 119.39 I think was the number.

    Was anyone surprised how well the CAD did against the dollar? Pretty much stayed even since Monday. I guess whats good news for American, is good news for Canada :)
     
  4. Curious, is this just me, or is anyone potentionally worried about a possible trade war between China and the US? I'm just imagining what could happen...the chinese government (mind you, the second largest holder of US Treasurys) could retaliate by selling a LARGE chunk of its US holdings, which would drive the dollar's value down!