"Whichever series we chose, we should chose the nominal rather than the real. The reasoning here is simple: Our market indexes are not inflation adjusted, so our base shouldn’t be either."
- FRED
I was looking for colors to match the default background blue of the FRED graphs. Went to FRED, searched for graph color values, didn't get lucky.
Clicked EVERYTHING and searched again. The third hit caught my eye:
The Market vs GDP. I risked a click.
I got a lesson in how to use FRED to make a graph.
Nothing on color values. That's so 1990s, I guess. But I did find -- Oh! They want to see "the stock market as a percentage of GDP or GNP". Okay, that might be interesting.
No. Not the graph, anyway.
Skimming past FRED instructions about things I already know, I come to this:
For this graph we could really choose either GDP or GNP. As GNP is a little more comprehensive, we’ll choose it (the nominal series) for our base.
Note: Whichever series we chose, we should chose the nominal rather than the real. The reasoning here is simple: Our market indexes are not inflation adjusted, so our base (GDP, GNP) shouldn’t be either.
GNP is "a little more comprehensive" than GDP. That's interesting, given that it's coming from people who work at FRED. I wonder what it means.
But I'm not focused today on which data to use or how to get it. Today, I'm focused on what they think at FRED about dividing nominal values by inflation-adjusted values. As a rule, they don't like it.
Let me repeat that: They don't like it.
I don't like it, either.
I don't like it when it is used to fake evidence that printing money causes inflation.
I don't like it when it is used to fake evidence that rising labor costs cause inflation.
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