inflation equation

F

forexcranium

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?
 
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
 
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 :)
 
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!
 
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