Let me ask yet again, what is it about the famous Milton Friedman quip about monetary policy that today's central bankers don't seem to get? According to Friedman, monetary policy had (has?) an effect but only with a long and variable lag. Were all of today's central bankers trained by rational expectations cowboys to believe that all markets always clear instantly?
Here are monetary data from FRED for the Canadian economy:
Fascinating how M1 exploded early in the pandemic and then was followed (with a long and variable lag) by inflation that central bankers seemed surprised by. The last two Governors of the Bank of Canada oversaw this expansion and acted far too late to reduce the inflationary pressures in the economy (and I'm disappointed since both of them got PhDs from UWO).
And look at the money supply data in the past few months! The money supply is actually shrinking in Canada. No matter what the economy is like now, this decline in the money supply strongly indicates we're in for a serious recession, again after a long-and-variable lag.
How long is the lag? Nobody can be sure, which is why Friedman answered the way he did. My guess: 18 months +/- six months.
hat tip to David Laidler, who kindly discussed this situation with me earlier this week and who told me that Cdn monetary data are available on FRED.