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The myth of hyperinflation series #5- Velocity of moneyEven if the purchasing power is rising, without the increase of velocity of money, there will be no inflation and sustained economic growth. Circulation/velocity of money measures the interval between money transactions, decline means less transaction is taking place and the interval between money transactions is getting longer. According to the July 2020 Senior Loan Officer Opinion Survey on Bank Lending Practices, senior loan officers have tightened their standards and terms on commercial and industrial (C&I) loans to firms of all sizes. Furthermore, banks reported weaker demand for C&I (commercial & real estate) loans from firms of all sizes and weaker demand across all three major commercial real estate (CRE) loan categories- construction and land development loans, nonfarm/nonresidential loans, and multifamily loan over the second quarter of 2020. Next, we will look at demand and consumption.
FRED:WM2NSEducation
by Libratus
2
Money Supply (M1) / GDP - 2M ChartMilton Friedman's Money-Supply Rule: Growth of the Money Supply << Rate of Growth of Real GDP = Recession --There is not enough money to buy what has been produced. Growth of the Money Supply >> Rate of Growth of Real GDP = Inflation --There is an abundance of money and not enough goods - prices will rise Growth of the Money Supply == Rate of Growth of Real GDP = Equilibrium Bottom Line: We are entering a severe inflationary period. Prices have increased a lot over 90 years and should be seeing this trend continue. --Gold, Silver, Commodities, Assets will continue to increase as long as the below remains true. --The Feds have resorted to unlimited quantitative easing to fight a deflationary spiral that would cause mass bankruptcies, unemployment, and credit/ liquidity shortages. --Negative Interest Rates Next?
FRED:WM1NS
by Three-Bull-Insight
16
Velocity of Money (M1 and M2)M1 = coins and currency in circulation + checkable (demand) deposit + traveler’s checks. M2 = M1 + savings deposits + money market funds + certificates of deposit + other time deposits. The velocity of money is the frequency at which one unit of currency is used to purchase domestically- produced goods and services within a given time period. In other words, it is the number of times one dollar is spent to buy goods and services per unit of time. If the velocity of money is increasing, then more transactions are occurring between individuals in an economy.
F
by 420snoop
4
Gold vs M1 and M2 Money SupplyM1 = coins and currency in circulation + checkable (demand) deposit + traveler’s checks. M2 = M1 + savings deposits + money market funds + certificates of deposit + other time deposits. We are looking at the GC1! gold futures vs these money supplies As we print more we expect these money supplies to increase, so we can start to see the 'real growth' in terms of how much $ is 'out there' I examine lots of these 'composite' charts as I call them, but let me know your thoughts as well! **NOTE** Because sometimes there are scaling issues; attempt to line the angles up with the black lines with same origin, thanks! Manage your own risk Much Love GL HF xoxo snoop
COMEX:GC1!
by 420snoop
1
Indexes vs M1 & M2 Money SupplyM1 = coins and currency in circulation + checkable (demand) deposit + traveler’s checks. M2 = M1 + savings deposits + money market funds + certificates of deposit + other time deposits. We are looking at the major US Indexes Dow 30, SPX 500, Nasdaq 100, & Russell 2000 vs each of these types of money supplies As we print more we expect these money supplies to increase, so we can start to see the 'real growth' in terms of how much $ is 'out there' In the more liquid M1 Money supply it looks like we may have bottomed here on the indexes by testing the 'all time' trend line But in the less liquid M2 Money supply we /could/ expect a fall further if things really go south here. We never tested the 'all time' trend line. No /need/ to but if we did it would be within reason. I examine lots of these 'composite' charts as I call them, but let me know your thoughts as well! Manage your own risk Much Love GL HF xoxo snoop
DJ:DJI
by 420snoop
Gold and Money Supply. Why Gold is a good long-term investment.Here we see the correlation of Gold (XAUUSD) and M1 (money supply composed of physical currency and coin, demand deposits etc). During the last two financial crises (DOTCOM and SUBPRIMES), the central bank raised the rates to support the stock market collapse and save the economy from recession. As you see when rates were raised and money supply spiked, Gold started rising as well as a counter to inflation. Similarly, Gold has spiked since March 2020 when the Fed announced the trillion dollar rescue package to counter the shattered demand from the COVID lockdown. In our opinion that makes Gold a necessity to any investor's portfolio on the long-term. ** If you like our free content follow our profile to get more daily ideas. ** Comments and likes are greatly appreciated.
FRED:WM1NSLong
by InvestingScope
1
Fed Prints Money to Fight COVID19: M1 and M2The chart shows the sharp increase in US "money supply: upon Senate approval of a $2 trillion coronavirus stimulus package Money Supply: There are two definitions of money: M1 and M2 money supply. M1 money supply includes those monies that are very liquid such as cash, checkable (demand) deposits, and traveler’s checks M2 money supply is less liquid in nature and includes M1 plus savings and time deposits, certificates of deposits, and money market funds. The Federal Open Market Committee (FOMC) and associated economic advisers meet regularly to assess the U.S. money supply and general economic condition. If it is determined if, and how much, new money needs to be created.
FRED:WM1NS
by gb50k
1
GFC to the Corona Virus: An Overview of Economic StimulusI've stuck with looking at M1 as a general proxy for economic stimulus more broadly for the sake of simplicity as this an overview. The primary implicit question here is whether or not more economic stimulus will be effective or not and to what extent under the present circumstances. The need for liquidity in the markets has certainly been evident recently, as is a response to the corona virus and its economic impact. Those things notwithstanding however, my own conclusions have been that with the dual deflationary effects of an aging population in the developed world, and the role of technology in reducing costs, has much to do with the failure of central banks to reach or sustain target rates of CPI or wage growth in most places globally. I believe the US has been relatively successful (more so than most) due in no small measure to the disproportionate success of its global tech giants (part of the aforementioned cost ructions trend). If we assume more economic stimulus will work to a degree, there is evidence of diminishing returns, are we getting close to a depression-type scenario or some other breaking point (like currency devaluation or inequality leading to political turmoil for example), or can it all be managed somehow by central banks and governments?
CME_MINI:ES1!
by Azorix
Money Printing. WOW. Monthly log chart dating back to 1976. Parabolic in 2012 to say the minimum. How this recession plays out is beyond me. Something has to give. Based on my other charts, a pretty picture is not depicted. Clearly all that excess money supply is in financial assets. Makes sense that as soon as corporations experience an earnings recession while at the same time, having to roll over debt at the higher rates, money left over for share buybacks will not be plenty. What buyers will stand ready to make up for that decrease in demand, is unclear.
FRED:WM1NS
by UnknownUnicorn4328351
The Fiat Experiment. Now Entering a New Massive Bubble. Hold on.The chart mostly speaks for itself, but.. My Hypothesis: Signal 1: The Fed drastically lowers the interest rates. Money supply increases. Stocks inevitably go up due to there being more money in circulation. Signal 2: The Fed notices the inflation and drastically raises interest rates. Money supply becomes stagnant. Signal 3: Money supply is stagnant, however, stocks continue to rise. We are now in a bubble. POP! Repeat... How long can this continue? The Fed has painted itself into a corner and has already gone down to basically 0% interest. Will they have a negative interest rate next time? 6 Years of an artificially low interest rate has created a fake bull market that's only growing because money supply has drastically increased. This bubble looks like it could hurt much worse than the last two. Why doesn't the fed stop making drastic increases/decreases to the interest rate? Why not a more gradual/linear change in rates? This feels like a casino. Could The Fed learn from history? Maybe. But not likely when you factor in politics. The Fed would have to sit by and watch the economy crashing while it only gradually lowers interest rates over a much longer period of time, which would drag out the recession. Are they willing to do that? The last two bear markets lasted 1.25 and 2.5years. Imagine a recession that lasted 5+... As for gold... During the Dot Com Bubble, gold dropped 30% but eventually rose into the Housing Bubble. Then during the Housing Bubble it kept rising and went on to hit an ATH. This time around, I'm confident gold will never see $800 again, and the top could be $5k+. It'll be interesting to see how gold acts during this bubble, will it continue up as it did during the Housing Bubble? Or is it going to go sideways for a while before a huge move up? Takeaways For me, it's incomprehensible to see how this doesn't fail, eventually. Will it be after this next bubble? 20 years from now? 50? I have no idea, but considering we're in a casino, I'm All-In that this is going to get ugly. (never mind when technology/AI starts taking more jobs while the global population is increasing...) Time will tell, but for now, staying in stocks and gradually shifting to gold (and silver) in the coming years seems like the best "bet" OH! & don't forget about crypto... ;)
SP:SPXLong
by liamcambra
6
Short term Short, long term LongWell everything is said on the title, but if we do look carefully on the chart, the reversal pattern didn't end yet. MA50 and MA100 are not crossing yet. We caliber MA on a faster period, we are not there yet. USDJPY Pair arrived at a 50% Fibo retracement level. That support level is rather strong. Bellow, it's the 100YEN level which is quite strong as well and you would need a serious momentum to break it up. Therefore, on a short term basis, there is still a romm for a downside, but I don't think that there is a lot of room left. On macro economic terms, we should bare in mind many datas. 1- BoJ Has decided to end its monetary easing baring in mind the "positive" shape and the recovery of the Japanese economy. 2-FED is still keeping its schedule with regard Tappering. Which means that there won't be any more easy USD on the market. 3- FED's High level official are starting to talk about an eventual increase of interest rate which is something normal when you have printed that much money, in other words with de monetary supply made by FED that is rather normal no matter what is the shape of the economy. 4-On the Monetary Supply M1 + M2 in USD and with FED medium term policy, USD will strenghten against all major currencies. Therefore there is still a romm between 101 and 100 but, on a medium to long term, USD should strengthen against JPY.
by Pashabxl