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Politics : President Barack Obama -- Ignore unavailable to you. Want to Upgrade?

To: gerard mangiardi who wrote (132804)	4/7/2013 9:02:57 AM
From: RetiredNow	Respond to of 149317

Gerard, well, the money velocity is plummeting. That tells us that economic activity is plunging as well, despite the proselitizing to the contrary. So that is something we should all be keenly worried about. But I think I get your point. If we are to be worried about inflation rearing its ugly head, then we need to wait until money velocity turns around and starts to accelerate. That coupled with continued Fed money printing could lead to very high inflation. But we're not there yet. I think the most worrisome thing is the catch 22 the Fed and our government has put us in. There policies are destroying capital formation and the economy. But to goose the economy, they are money printing at an extreme rate. If they get there wish and the economy accelerates, then money velocity will also accelerate. If inflation also accelerates with the money supply, then it may result in a currency crisis and a huge spike in money velocity if people lose confidence in the currency and start to reduce currency exposure by buying anything not nailed down that might hold its value. So ironically, Fed achieving its goal may usher in a currency crisis on the one hand or simply stagflation on the other. It's a catch 22, which a very low probability of a satisfactory outcome.