Recovery, Recession or Depression: The Unpleasant Truth

Mark McHugh reports:

Velocity of money is the  frequency with which a unit of money is spent on new goods and services.   It is a far better indicator of economic activity than GDP, consumer prices, the stock market, or sales of men’s underwear (which Greenspan was fond of ogling).  In a healthy economy, the same dollar is collected as payment and subsequently spent many times over.  In a depression, the velocity of money goes catatonic.  Velocity of money is calculated by simply dividing GDP by a given money supply.  This VoM chart using monetary base  should end any discussion of what ”this” is and whether or not anybody should be using the word “recovery” with a straight face:

 Have the Last 5 Years Been Worse than the Great Depression?

In just four short years, our “enlightened” policy-makers have slowed money velocity to depths never seen in the Great Depression.

We are stuck in a depression because the government has done all of the wrong things, and has failed to address the core problems.

For example:


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Ben C
Ben C
9 years ago

Velocity of money is a little limited in that it shows savings or paying down debts as a drop, and shows loans and items purchased on credit as a boost. The chart above shows the change over from a “savings” based consumer to a “credit” based consumer, as well as the consequences of that policy going too far and debts coming due.