Economics Asked on July 18, 2021
I am currently reading Dying of Money by Jens O. Parsson and he criticizes the way price level is calculated. Basically he tries to make a case that since money are not only used to purchase goods but also used for investing, there are two money supplies and two velocities at the same time:
There are at all times two distinct money supplies and two distinct
velocities of money, one each in the market for national product and
the market for national wealth ["investments"]. The comparison between
the total supply of money and the gross national product alone, as is
made in computing the so-called "income velocity" of money, is
meaningless.
First, I wonder what does he mean by two distinct money supplies? Where does the second supply come from? Is it like borrowed money?
Second, is there a velocity metric for investments or maybe even inflation metric too?
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