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To: Elroy Jetson who wrote (394432)	9/16/2009 3:33:30 PM
From: Real Man	Read Replies (1) \| Respond to of 436258

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!