Welcome to European Tribune. It's gone a bit quiet around here these days, but it's still going.
Display:
Yes, according to Gary North and Mish. I finally got around to reading these posts, and I think you might find them interesting. You all are about to converge at the same conclusion: the real action has been in M2 and FRB repos, the ultimate buy-back scheme. Basically, the discount window has been and will remain a cover for sucking money out of circulation; supply has been flat, after all. (Graphs of YoY data sets)

As for velocity, well, vortex is a good metaphor. I stand by my statements that US fiscal policy is geared to consolidate and add value to fiat in the top 1%. The domestic market will be squeezed of every penny earned. Psychology trumps data in predicting what makes the worm turn. Every time.

Diversity is the key to economic and political evolution.

by Cat on Sat Oct 6th, 2007 at 10:27:15 PM EST
I stand by my statements that US fiscal policy is geared to consolidate and add value to fiat in the top 1%. The domestic market will be squeezed of every penny earned.

Yes, very much so.

A political narrative is built into all the main structural economic indicators, and that makes them suspect as a measure of what's really happening in the real economy. (q.v. our discussions about unemployment.)

Using them as if they measure something that matters only propagates the narrative - it doesn't necessarily tell anyone anything useful about the real experience at street level.

by ThatBritGuy (thatbritguy (at) googlemail.com) on Sun Oct 7th, 2007 at 05:39:40 AM EST
[ Parent ]
Velocity and "GDP Deflator" are fudge factors: velocity is "that number which, multiplied into the chosen measure of money supply, equals the nominal GDP"; and the GDP deflator is "that number which, multiplied into the nominal GDP, gives the desired real GDP".

We have met the enemy, and it is us — Pogo
by Carrie (migeru at eurotrib dot com) on Sun Oct 7th, 2007 at 08:18:13 AM EST
[ Parent ]
Fudge factor, yes! I swear, anytime "multiplier" is dropped in conversation (much less "velocity" over the past 20 years), I first check my wallet then check my textbook definition.

Diversity is the key to economic and political evolution.
by Cat on Sun Oct 7th, 2007 at 10:33:14 AM EST
[ Parent ]
Well, actually velocity of money can be defined as the average number of time a unit of currency changes hand (by involving in a transaction) in a year. It could theoretically be measured if all transactions where centrally registered. In practice, accurate measurement is impossible, not just because of more or less shadow cash transactions, but also because the volume of data for registered transactions (cards, checks) is to large to centralize.

But this intuitive meaning helps you understand some extreme cases of the equation of money (like, in times of hyper inflation, cash burns your hands, you want to change it for material goods immediately, and the velocity of money increases greatly)

Pierre

by Pierre on Sun Oct 7th, 2007 at 04:03:11 PM EST
[ Parent ]
You're right, and I'm exaggerating.

We have met the enemy, and it is us — Pogo
by Carrie (migeru at eurotrib dot com) on Sun Oct 7th, 2007 at 04:18:58 PM EST
[ Parent ]

Display:

Occasional Series