2012-05-02: 0.852
2012-05-16: 0.848
2012-05-30: 0.847
2012-06-14: 0.841
2012-06-27: 0.859
2012-07-11: 0.868

2012-05-16: 0.848
2012-05-30: 0.847
2012-06-14: 0.841
2012-06-27: 0.859
2012-07-11: 0.868
2012-07-25: 0.864

appreciate your updates VP

2012-06-27: 0.863
2012-07-11: 0.849
2012-07-25: 0.864
2012-08-08: 0.851
2012-08-22: 0.867

2012-07-11: 0.849
2012-07-25: 0.864
2012-08-08: 0.851
2012-08-22: 0.867
2012-09-05: 0.897

Velocity creeping back up.. Must be givin' The Bernank wood.

Thanks for updates, Colk.

if the denominator is moving then the your values are going to change.. any decrease to the M1 multiplier needs to factor in that... think about it.

if 100 dollars brings 10 dollar of output =.10
now vs 150 dollars bringing 13 dollars of output = .08... so by this measure.. it would appear that velocity is down... but this is not correct.. because Output.. we just just said was 13.. and 13 is higher than 10..

Las,

No.. We're not measuring quantities; We're measuring relative effectiveness. If 150 brings 13, then overall effectiveness of each dollar is still lower than 100 bringing 10.

I.E., Output's raw number may indeed be increasing, but it's requiring more upstream juice to realize that increase in output; On a proportional basis.

And the upstream juice expands interest exponentially where the cash to pay the interest is never created in the system to begin with.

USO you are correct. But I guess it all depends on what information your trying to gather from all this. My point is, m1 multiplier as it being presented here is pointless.. it will always go lower and lower because the money supply always increases with time.. and in the next few years .. its going to expand exponentially..

.. see attached.

Money is not expanding. Debt is.

Quote:

Money is not expanding. Debt is.

Right.

And.. it's still moving rrreeeaaallllyyy slow... but turning gradualy.

So....... Place your bets, folks.. When does it go to 100?

This thread is actually concentrating on the wrong thing. The Fed calculates and publishes M1 velocity, M2 velocity and MZM velocity, however velocity of monetary base, which is the sum of all debt/credit in the system (data going back to 1918) must be calculated manually by dividing GDP by monetary base.

]
http://research.stlouisfed.org/fred2/gra....

With the IMF recently lowering its 2012 US GDP growth forecast to 2%, while the monetary base is expanding at about a 5% clip, know that velocity of money is grinding lower every time you breathe.

If I give you 50˘ and as a result of that transaction, you owe me $1.00, what interest rate have I charged you? Obviously, I’ve charged you 100% interest and I don’t give a rat’s ass about you or your kids. I’m pure evil and you’re pure stupid.

In 2011, every dollar of GDP growth created $2.08 in debt. In real life, that’s 108% interest plus the nominal rate, and our twisted leaders want you say, “Thank you sir, may I have another!”

EDIT: BWT, the chart above is reflective of this little old chart that Nate and Chris Rupe did a while ago....if it were updated to July 2012.

Steph,

It looks like right around December 7, 1941 we got a real boost...

Odd that we are in the same territory here in 2012 and the same BS is going on...

God help us...

That chart really tells the whole story. There should be no more arguing over inflation/deflation as a monetary phenomena. Actual unencumbered dollars are becoming scarce. Emittance of unbacked credit is not making up for this, it is merely destroying GDP.

Yes, we have price inflation in things we NEED. Yes, we have price deflation in things we might want. This is the nature of emittance of unbacked credit with no constraint (a/k/a infinite leverage). As a MONETARY phenomena we have a massive deflationary collapse....but no one knows about it. This is because the data points are put out separately with no comparative analysis.

The Federal Reserve actually has phenomenal tools. They publish quite a bit of data, what they do NOT do is show correlation between important, related sets of data, and they conveniently eliminate publishing stand-alone data that could give away the truth by itself.

Usonian wrote..

When does it go to 100?

It passed it.

2012-07-25: 0.864
2012-08-08: 0.851
2012-08-22: 0.867
2012-09-05: 0.897
2012-09-19: 0.901

http://research.stlouisfed.org/fred2/ser....



Notice the declining tops trend line over the last 36 months or so. The thing to watch for direction wise now is another leg downward over the next few weeks or a breakout.

2012-08-08: 0.851
2012-08-22: 0.867
2012-09-05: 0.897
2012-09-19: 0.901
2012-10-03: 0.911 <-- For you conspiracy minded looking for a topout #!!

Wow, nice job, Pika! I didn't notice your posts above from a month ago until Videopro updated the thread. Quite an interesting chart; don't recall Karl Tickering it, but he probably should have (my apologies if I missed it.)

Pika wrote..

Yes, we have price inflation in things we NEED. Yes, we have price deflation in things we might want.

One need look no further than housing. That's a helluva lot of deflation right there, and homes are still too damn expensive. But look what the government has managed to do via their toady banksters: "we can't prop housing up, so we'll just inflate everything else that isn't nailed down." These are the so-called "fingers in the dam" that Bernanke is desperately trying to plug.

Deflation. Yeah, it's a vicious spiral and it sucks. Ya lose your job, your savings, your home, your car, etc., and pretty soon you're scrounging around like a street bum. That is precisely what going into debt gets you -unless you happen to be some insider or just plain lucky- and attempting to avoid it is akin to trying to cheat death over and over again. It's a bull**** system, and we're all paying for it while the top eats.

Mike.

Quote:

Yeah, it's a vicious spiral and it sucks.

Really? Let's analyze this a little bit....

Quote:

Ya lose your job,

Okay.. Possibly (maybe likely).. OR.. you get reduced hours. However, see next:

Quote:

(lose) your savings,

No, you don't. If you have it denominated in the deflating currency, it actually gains purchasing power. Same goes for your earned income.

Quote:

your home,

Depends. What if you own it outright? All you've got to cover is property taxes. Those will probably rise, but not very fast (they're sticky). Even if you don't own your home, in a truly 'dire' deflation, you can bet you'll have significant bargaining power against your bankrupt mortgage holder. Suddenly, the debtor is the shark.

Quote:

your car,

Pretty much the same situation as your house.

So.. Tell me again.. Why exactly should I fear deflation? I guess if I'm a banker, then yeah.. it scares the **** out of me. As the guy on the opposite side of the table (or an observer), I say bring it on, man! It'd probably be one of the greatest things to happen to me in my lifetime.. and a LOT of other people's, too.

A jubilee is just deflation with a cute name.

Usonian (and/or others),

Interesting analysis. Agree with you on the job and currency aspects.

What would you say about all the refinancing going on now with record low rates?
Should one join the refinance party to lower interest rates only? Would taking cash out be beneficial (in gaining purchasing power as stated in your comment)?

Free,

Quote:

What would you say about all the refinancing going on now with record low rates?

Well, I guess get the cheap money while you can. However, it'd be way easier to just pay down principal (which is what I'm doing). I guess if your income is taking a hit, refi'ing to a lower rate makes sense if it lowers your monthly payment. Personaly, that'd be the only reason I'd have to refi into lower rates; Get a lower payment to make my reduced income go further. If that's not your specific dillema, then it makes more sense to just pay down principal on the existing mortgage (which saves you a crapload of interest expense).

Quote:

Would taking cash out be beneficial (in gaining purchasing power as stated in your comment)?

This bet only works if inflation continues, as the money you borrow today will continue to 'cheapen' into the future. You'll be paying back that debt with devalued currency. If deflation starts, that bet goes against you... You'll be paying back the debt with a currency that has far more purchasing power than the currency you borrowed initialy.

That's the nut of our whole discussion, here. Will money (and credit outstanding) get more plentiful in the future (inflation and devaluation of the currency), or will it get more scarce as defaults send currency units to money heaven (deflation and enhancement of the value of each currency unit). I dunno. Historicaly, fiat currencies have almost =always= inflated (cheapened) over the long haul, so it would seem a good bet.. BUT.. deflationary events have occured, and if you're in the wrong place in history with high debt, you get smoked.

For myself, the safest strategy is to keep debt low, stay at the top of my career game so I can always be employed (even if marginaly) and accumulate assets only at moments of deflationary action in the markets. So far, it's worked well. Over my 30 years as an adult, my inflation adjusted wealth (measured in currency and assets) has steadily increased over time. It's slow, boring and tedious.. but it's a gain. I'm happy with that, on balance. I've got nice things to delight my senses, no financial crisis episodes wrecking my family life and a feeling of overall security (which is worth a lot, to me).

As I've said before on TF many times.. I don't multiply my wealth by playing games in the markets. Instead, I work, do good work, increase my professional network, earn my way into bigger and better jobs and thus increase my income by being a valuable producer of goods and services that my clients will pay a premium for because they want the very best. There's no free lunch. Getting to where I am was damn hard.. but it's incredibly satisfying.

To add color to the above:

I work in the construction industry. I deal in hard measurements, so as you might guess, having 'flexible' money*****es me off to no end. Here's how I look at:

Currency (USD's in our case), is a rubber tape measure. Say I need to make a hallway for people to walk through. I know how wide it =actualy= needs to be, in the real world. I apply my tape measure.. 36 inches. Awesome, all is well. Then BenB takes my tape out of my tool bag, squishes it, and makes all the marks on it closer together (inflation) and all of a sudden the hallway I just built measures 42 inches. The hallway's width didn't physicaly change, just the measurement did. So after BenB has monkeyed with my tape maeasure, I suddenly need to rethink how many inches I need to make my building to 'fit' an =actual= human being. Going the opposite direction, if deflation occurs, and the tape gets stretched, suddenly the marks on my tape get farther apart.. and a 24 inch (measured) hallway fits the =actual= human being. The hallway is still the same width, but the tape measure's variability makes it impossible to know for sure what it will measure at any one time in nominal units ("inches").

You can't build a building that way. By extension, you can't build a stable financial lifetime with the central bankers' rubber tape measure money. You spend huge amounts of time and energy converting all your measurements back and forth to find reality. This stifles business. you need to be able to have some certainty that measurement systems will stay consistent over the course of your project (which in financial terms, is your LIFETIME). It's criminal in my opinion.. and only serves bankers and people trying to 'game' the system.

Quote:

That's the nut of our whole discussion, here. Will money (and credit outstanding) get more plentiful in the future (inflation and devaluation of the currency), or will it get more scarce as defaults send currency units to money heaven (deflation and enhancement of the value of each currency unit). I dunno. Historicaly, fiat currencies have almost =always= inflated (cheapened) over the long haul, so it would seem a good bet.. BUT.. deflationary events have occured, and if you're in the wrong place in history with high debt, you get smoked.

The money quote, right here.

Good info, thanks for your posts.

2012-08-22: 0.867
2012-09-05: 0.897
2012-09-19: 0.901
2012-10-03: 0.911
2012-10-17: 0.911<-- Again! For you conspiracy minded looking for a topout #!!


http://research.stlouisfed.org/fred2/ser....

2012-09-19: 0.900 <-- Revised downward from previous .901
2012-10-03: 0.911
2012-10-17: 0.911
2012-10-31: 0.917
2012-11-14: 0.900


http://research.stlouisfed.org/fred2/ser....