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Excess money supply above the rate of inflation translates into GDP growth and
growth in financial assets. Example from today - If inflation is 1.5% and
money supply growth rate is 9% then the 7.5% excess can go into the economy,
some to GDP and the rest to financial assets. Excess money supply growth would
need to turn down for 3-9 months (lead times have varied historically) to mark
tops in financial markets.
Ned Davis research has charts of this and many other relationships.
His website is: http://12.8.227.83/
Howard Bernstein
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