Couple weeks ago I showed this graph:
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| Graph #1 |
"Growth definitely slowed when the interest rate went up. Growth slowed because the interest rate went up."
Commenting on the post, Jim quoted me and said
I can't understand how you can look at that graph and make such a statement. It seems pretty obvious to me that Fed interest rates are lagging behind GDP which suggests the correct conclusion is that the economy is driving Fed interest rates.
Well...
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| Graph #2, Recreated from Scratch to Match Graph #1, and marked up |
Like that.
Blue accelerated out of the 1954 recession. Red noticed, and went up faster in early 1955.
Blue slowed slightly then, but not enough. Red went up faster again in the second half of 1955.
Blue slowed more, and ran parallel with red until 1957.
Growth definitely slowed when the interest rate went up. Growth slowed because the interest rate went up.
2 comments:
I just discovered that snow plows are what is causing it to snow.
I observed that every time it snows I see snow plows out on the roads.
When it doesn't snow they aren't there. I think that's pretty good evidence that snow plows are causing the snow.
Oh, that reminds me of the Dark Sucker Theory!
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