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Strategies & Market Trends : 2026 TeoTwawKi ... 2032 Darkest Interregnum
GLD 445.60-10.1%Jan 30 4:00 PM EST
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To: 3bar who wrote (108603)11/25/2014 7:31:34 PM
From: Elroy Jetson1 Recommendation

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3bar

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The reason is the effective money supply is M * V and V declines precipitously during panics and adverse economic climates.

M was also greatly reduced through foreclosures and bankruptcies, or reduction in credit. Much of the M which replaced the vaporized M does not circulate, which further skews V toward zero.

V (monetary velocity) is extremely difficult to measure directly, so if your inflation rate is close to zero you've added the correct amount of M, even if it was double the existing numbers. Once velocity increases, indicated by rising inflation, you merely remove M until inflation is once again near zero. Note though that the Fed has not increased the actual monetary base by so much as a penny.

We ended up in a global depression in the 1930 precisely because economists of the day thought like those you posted comments from. At this point in history there is no excuse for their flavor of mis-education.
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