<https://forum.objectivismonline.com/index.php?/topic/35413-inflation-gdp-and-m4/>
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"I recently read an interesting article about the true measure of inflation, and given that the official government CPI and RPI figures always seem so unreliable, what with gerrymandering of the basket etc. finding a more fundamental concept of inflation was interesting.\n \n\n\n\tThe formula was basically:  GDP growth - M4 growth = inflation on the basis that money supply and GDP should go hand in hand if money is to maintain its value and that any deviation in the money supply would result in inflation. The supposition is that prices as such are irrelevant as they are set by what people will pay,and that the value of money as a medium of exchange is what's of interest.\n \n\n\n\tIts simple and there is some rationale behind it and the resulting figures tally well with my perception of past prices etc. over a long span. but is it a reasonable concept - how legitimate is the theory behind it?  \n\t \n\tNow I know that this is at odds with traditional measures of inflation invariable based on a 'basket' of goods - it seem to me that this is leaving out whole swathes of the economy such as property, investments and paper instruments. This subtractive approach seems to be more in line with aims of politics than measuring the value of money.\n \n\n\n\tthanks for any thoughts.\n \n"
<https://forum.objectivismonline.com/index.php?/topic/35413-inflation-gdp-and-m4/>