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Strategies & Market Trends : The Ego Forum
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To: hubris33 who wrote (12042)4/30/2013 4:09:10 PM
From: hubris33   of 12175
 
OK, so my chart of the "rocket ride" up in POG garnered some comments both public and private. So now I feel compelled to toss something else into the mix. About the time I posted asking about release dates on Fed data relative to velocity, I found the following article on another SI thread.

Message 28855176

The original article can be found here:

hoisingtonmgt.com

I think this is a significant piece and all interested in POG and PMs should at least consider this information.

I mean how can one not react to an opening hook like this:
“The Federal Reserve is printing money”. No statement could be less truthful. The Federal Reserve (Fed) is not, and has not been, “printing money” as defined as an acceleration in M2 or money supply. Just check the facts.

Now least anyone think I've fallen and hit my head, I note that Mauldin and Butler both have commented and highlighted this article.

Part of what I find to be significant is the larger picture of the velocity of money in our system. Here is the blow up chart:



So at a relative velocity of 1.57 we are at the lowest point in 50-years? Can this help explain why increases in the Fed's balance sheet hasn't had the effects that Jimmie S would have expected? What turns the tide in this down trend of velocity from the 1997 peak?
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