Money supply and the housing bubble.

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    Every time I get into a discussion with some statist about the housing bubble and the financial crisis of 2008, I end up asking them where the money to inflate the bubble came from if not the Federal Reserve and the government printing money, and fractional reserve ramped up by the Fed’s low interest rates.

    What I would like to do is put together the actual numbers. I think this is not unaccaptable by Austrian standard to do such an analysis, is it?

    I would like to mathematically demonstrate that changes in supply and demand, or money provided by the “shadow banking system” or through mortgage backed securities set free by the repeal of Glass Steagal.

    To do this, I need to take the velocity of money into account. After all, if money was changing hands at a greatly accellerated rate, its as if there is that much more money to go around. So far as I can see, the velocity didn’t change all that much, from maybe 2 to 2.3 from 2004 to 2007.

    That comes from a graph of the velocity of money I found on Wikipedia. I do need a better source of data for velocity, and things like GDP, CPI inflation, growth of other sectors of the economy, and of course, housing prices, including total spending each year on housing. I would like to be able to break it down year by year, so that graph I did find isn’t good enough.

    Any ideas on how to proceed? What would be the best sources of data for this kind of analysis?

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