It's just funny how folks look at the same chart and see
different things. Deflationists just plot 1/Base, call it
velocity, and draw attention to the drop. Coz consumer is in
debt and not consuming. That said, I'll NEVER agree that
printing money is deflationary. It contradicts common sense.
Therefore, I choose to plot the base as it is, directly.
The effect is bottled inflation, as usual. As soon as the
economy recovers, you'll see lots of it. -g-
Sharp drops of velocity were recorded in every recession, including
very inflationary recessions, cause the Fed did exactly what
it did in that chart below, only less of it. It is true
that when the economy stops growing, inflation subsides.
If you wish, by plotting velocity and claiming it is deflation,
folks hold this chart below upside down. I'm not kidding
either, cause the GDP does not change that much when you
plot the ratio while the Fed is injecting Big money, so
velocity is effectively 1/Money supply!
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