Originally posted by: cohodk Not at all derryb. Spending is not at a 60 yr low. Learn what these graphs represent before commenting on them.
Your comment about the Fed printing all the money is correct, however, as typical, the portrayal of printing money having a bearing on velocity is an incorrect comparison, and is reason why you continue to call out conspiracy or manipulation theory when "your" assumptions or knowledge do not play out as planned.
Velocity of money: "The velocity of money is the rate at which money is exchanged from one transaction to another and how much a unit of currency is used in a given period of time."
Money is not moving, and MV chart clearly shows it's at its lowest in 60 years. For money to "move" it has to be spent. Holding onto this money indicates fear and very weak confidence. Confidence is a key to PM performance.
Thank you for discrediting yoor implied notion that velocity of money has to do with the printing of money.
Velocity of money does not demomonstrate spending either. It is the turnover of a dollar and is most closely tied to lending. IE, banks creating loans with deposits. Banks can take $1 on deposit and create $10 in loans---this is velocity. Banks are not lending at the rates in previous years, hence velocity is lower. People are spending, but with fewer borrowed dollars. Isn't that precisely what the fiscal conservatives, especially those that frequent this forum, want?
I didn't say that velocity of money has to do with the printing of money. I did say that an increase in the money supply normally results in price inflation. I also said that the fact that we are experiencing deflation in the face of massive money creation is contrary to basic economics and illustrates a breakdown in confidence and a reduction in spending. I presented MV to document that reduction in spending. Believe it or not, a decline in the turnover of a dollar is in fact a decline in spending.
While bank lending will add to MV (when the borrowed money is spent) as well as add to the creation of new money it is in the current environment a small portion of consumer spending or as you call it "the turnover of the dollar." Bottom line is MV tells us that money is being hoarded, not spent. MV explains current deflation (caused by lack of demand), even in the face of unprecedented money printing. Welcome to Bizzaro World.
Natural forces of supply and demand are the best regulators on earth.
Consumer spending is not great because 75% of American consumers aren't doing well. Nearly all the "money", both generated and created, added to the economy has landed in the hands of the top quartile. The percentage of Americans classified as low income is now over 50% and growing.
When so much money is concentrated at the top it doesn't make for a healthy economy and the concentration continues unabated.
Consumer spending is also not bad. It would be better if global interest rates were to rise thus giving retirees more confidence that their savings will support them thru retirement.
The number of Americans classified as low income will continue to increase as more boomers leave the workforce. These "statistics" that politicians throw around are misleading and used to generate fear. They know when you are afraid you are controllable. Why so many here feel the need to be controlled is an interesting study in social psychology.
It is interesting. I work and study with many people in the "lower half" and believe me they struggle to get their bills paid and put food on the table, have no disposable income and few opportunities for advancement. It was before WWII when things were worse and this time there's no war or post-war boom that's going to bail us out. The damage is far beyond repair at this point.
Originally posted by: VanHalenIt was before WWII when things were worse and this time there's no war or post-war boom that's going to bail us out. The damage is far beyond repair at this point.
Welcome to the WW on the middle class.
Natural forces of supply and demand are the best regulators on earth.
Originally posted by: VanHalen Consumer spending is not great because 75% of American consumers aren't doing well. Nearly all the "money", both generated and created, added to the economy has landed in the hands of the top quartile. The percentage of Americans classified as low income is now over 50% and growing.
When so much money is concentrated at the top it doesn't make for a healthy economy and the concentration continues unabated.
Consumer spending is also not bad. It would be better if global interest rates were to rise thus giving retirees more confidence that their savings will support them thru retirement.
The number of Americans classified as low income will continue to increase as more boomers leave the workforce. These "statistics" that politicians throw around are misleading and used to generate fear. They know when you are afraid you are controllable. Why so many here feel the need to be controlled is an interesting study in social psychology.
It is interesting. I work and study with many people in the "lower half" and believe me they struggle to get their bills paid and put food on the table, have no disposable income and few opportunities for advancement. It was before WWII when things were worse and this time there's no war or post-war boom that's going to bail us out. The damage is far beyond repair at this point.
By definition, the lower half will struggle. Nothing new here.
Just be careful to truly understand the numbers these politicians are trying to fool us with.
Originally posted by: cohodk Such an unprecedented increase in money demand has slowed down the velocity of money We having fun yet??!!
Always fun to debate a Keynesian. The deck will always be loaded in favor the the Austrian.
Has not your beloved FED been trying to stimulate spending (increase MV) by pumping out all the new money? They weren't even able to stimulate more consumer debt with lower rates. At least the government jumped on their bandwagon. Oh, I know, this time it's different.
Natural forces of supply and demand are the best regulators on earth.
Originally posted by: cohodk Such an unprecedented increase in money demand has slowed down the velocity of money We having fun yet??!!
Always fun to debate a Keynesian. The deck will always be loaded in favor the the Austrian.
Has not your beloved FED been trying to stimulate spending (increase MV) by pumping out all the new money? They weren't even able to stimulate more consumer debt with lower rates. At least the government jumped on their bandwagon. Oh, I know, this time it's different.
The Fed is no more mine than it is yours. And yiu should recall thst I have written for years that Fed should raise rates.
And even more so, you should realize I do not subscribe to any organized school of economic thought, which prevents me from having rigid and clouded thought, and allows me to be so damn accurate in my predictions and analysis , and you, well, not so much.
Originally posted by: Baley Sometimes, prices drop simply because the supply increases, independent of and relative to changes (in either direction) of demand for the goods and services, or the aggregate money "supply" or "velocity"
Why does the supply of goods and services increase? Productivity! (that used to be considered a good thing)
And oftentimes the demand that produced price X today, will produce price Y tomorrow, regardless of supply.
Comments
Knowledge is the enemy of fear
Not at all derryb. Spending is not at a 60 yr low. Learn what these graphs represent before commenting on them.
Your comment about the Fed printing all the money is correct, however, as typical, the portrayal of printing money having a bearing on velocity is an incorrect comparison, and is reason why you continue to call out conspiracy or manipulation theory when "your" assumptions or knowledge do not play out as planned.
Velocity of money: "The velocity of money is the rate at which money is exchanged from one transaction to another and how much a unit of currency is used in a given period of time."
Money is not moving, and MV chart clearly shows it's at its lowest in 60 years. For money to "move" it has to be spent. Holding onto this money indicates fear and very weak confidence. Confidence is a key to PM performance.
Thank you for discrediting yoor implied notion that velocity of money has to do with the printing of money.
Velocity of money does not demomonstrate spending either. It is the turnover of a dollar and is most closely tied to lending. IE, banks creating loans with deposits. Banks can take $1 on deposit and create $10 in loans---this is velocity. Banks are not lending at the rates in previous years, hence velocity is lower. People are spending, but with fewer borrowed dollars. Isn't that precisely what the fiscal conservatives, especially those that frequent this forum, want?
While bank lending will add to MV (when the borrowed money is spent) as well as add to the creation of new money it is in the current environment a small portion of consumer spending or as you call it "the turnover of the dollar." Bottom line is MV tells us that money is being hoarded, not spent. MV explains current deflation (caused by lack of demand), even in the face of unprecedented money printing. Welcome to Bizzaro World.
Natural forces of supply and demand are the best regulators on earth.
I gave you the layman's version. Here is another...Today's economic lesson
There you go again, taking the word of an anonymous blogger.
At least listen to what the so called experts have to say.
Natural forces of supply and demand are the best regulators on earth.
Consumer spending is not great because 75% of American consumers aren't doing well. Nearly all the "money", both generated and created, added to the economy has landed in the hands of the top quartile. The percentage of Americans classified as low income is now over 50% and growing.
When so much money is concentrated at the top it doesn't make for a healthy economy and the concentration continues unabated.
Consumer spending is also not bad. It would be better if global interest rates were to rise thus giving retirees more confidence that their savings will support them thru retirement.
The number of Americans classified as low income will continue to increase as more boomers leave the workforce. These "statistics" that politicians throw around are misleading and used to generate fear. They know when you are afraid you are controllable. Why so many here feel the need to be controlled is an interesting study in social psychology.
It is interesting. I work and study with many people in the "lower half" and believe me they struggle to get their bills paid and put food on the table, have no disposable income and few opportunities for advancement. It was before WWII when things were worse and this time there's no war or post-war boom that's going to bail us out. The damage is far beyond repair at this point.
Welcome to the WW on the middle class.
Natural forces of supply and demand are the best regulators on earth.
I gave you the layman's version. Here is another...Today's economic lesson
There you go again, taking the word of an anonymous blogger.
At least listen to what the so called experts have to say.
From the article you linked.........Such an unprecedented increase in money demand has slowed down the velocity of money,
I think that's just what I and my "blogger" wrote.
You stated the decline in velocity meant a decline e in spending. I, and yourself, have shown otherwise.
I understand you don't grasp economics, you don't need to keep proving it.
We having fun yet??!!
Knowledge is the enemy of fear
Consumer spending is not great because 75% of American consumers aren't doing well. Nearly all the "money", both generated and created, added to the economy has landed in the hands of the top quartile. The percentage of Americans classified as low income is now over 50% and growing.
When so much money is concentrated at the top it doesn't make for a healthy economy and the concentration continues unabated.
Consumer spending is also not bad. It would be better if global interest rates were to rise thus giving retirees more confidence that their savings will support them thru retirement.
The number of Americans classified as low income will continue to increase as more boomers leave the workforce. These "statistics" that politicians throw around are misleading and used to generate fear. They know when you are afraid you are controllable. Why so many here feel the need to be controlled is an interesting study in social psychology.
It is interesting. I work and study with many people in the "lower half" and believe me they struggle to get their bills paid and put food on the table, have no disposable income and few opportunities for advancement. It was before WWII when things were worse and this time there's no war or post-war boom that's going to bail us out. The damage is far beyond repair at this point.
By definition, the lower half will struggle. Nothing new here.
Just be careful to truly understand the numbers these politicians are trying to fool us with.
Knowledge is the enemy of fear
Such an unprecedented increase in money demand has slowed down the velocity of money
We having fun yet??!!
Always fun to debate a Keynesian. The deck will always be loaded in favor the the Austrian.
Has not your beloved FED been trying to stimulate spending (increase MV) by pumping out all the new money? They weren't even able to stimulate more consumer debt with lower rates. At least the government jumped on their bandwagon. Oh, I know, this time it's different.
Natural forces of supply and demand are the best regulators on earth.
independent of and relative to changes (in either direction)
of demand for the goods and services, or the aggregate money "supply" or "velocity"
Why does the supply of goods and services increase? Productivity!
(that used to be considered a good thing)
Liberty: Parent of Science & Industry
Such an unprecedented increase in money demand has slowed down the velocity of money
We having fun yet??!!
Always fun to debate a Keynesian. The deck will always be loaded in favor the the Austrian.
Has not your beloved FED been trying to stimulate spending (increase MV) by pumping out all the new money? They weren't even able to stimulate more consumer debt with lower rates. At least the government jumped on their bandwagon. Oh, I know, this time it's different.
The Fed is no more mine than it is yours. And yiu should recall thst I have written for years that Fed should raise rates.
And even more so, you should realize I do not subscribe to any organized school of economic thought, which prevents me from having rigid and clouded thought, and allows me to be so damn accurate in my predictions and analysis , and you, well, not so much.
Knowledge is the enemy of fear
Sometimes, prices drop simply because the supply increases,
independent of and relative to changes (in either direction)
of demand for the goods and services, or the aggregate money "supply" or "velocity"
Why does the supply of goods and services increase? Productivity!
(that used to be considered a good thing)
And oftentimes the demand that produced price X today, will produce price Y tomorrow, regardless of supply.
Knowledge is the enemy of fear
and
when the roosters finally come home to rest
Natural forces of supply and demand are the best regulators on earth.