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Strategies & Market Trends : 2026 TeoTwawKi ... 2032 Darkest Interregnum

GLD 414.48

+0.7%

Jan 9 4:00 PM EST

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To: Hawkmoon who wrote (113832)	10/17/2015 3:48:51 PM
From: Elroy Jetson	1 Recommendation Recommended By Hawkmoon Read Replies (2) of 219226

There's a practical upper limit to monetary velocity, depending on your technology. So restricting money supply results in declining prices and usually a smaller economy, rather than increased monetary velocity, as Volcker demonstrated when he ended inflation in the late 1970s. Monetary velocity is very costly to measure so it's always derived from a comparison with price stability and money supply. During a downturn, or economic depression as we've been in since 2006, the central bank increases the available money supply by what ever quantity is required to maintain price stability. From this huge increase in monetary supply the huge fear-driven decline in monetary velocity can be easily derived. A gold-restricted economy is slower-growing, and much smaller than it could have been, as financing is simply not available for most economically viable projects. Inflation is a problem to avoid but so is a crippled stagnant economy.

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