Guest Post: Money Velocity Free-Fall And Federal Deficit Spending
January 18, 2013 - 12:58pm
Submitted by Charles Hugh-Smith of OfTwoMinds blog, The velocity of money is in free-fall, and borrowing, squandering and printing trillions of dollars to prop up a diminishing-return Status Quo won't reverse that historic collapse. Courtesy of Chartist Friend from Pittsburgh, here are three charts overlaying the velocity of money and the Federal surplus/deficit. The charts display the three common measures of money: M1, M2 and MZM. From the St. Louis Federal Reserve site: M1 includes funds that are readily accessible for spending. M1 consists of: (1) currency outside the U.S. Treasury, Federal Reserve Banks, and the vaults of depository institutions; (2) traveler's checks of nonbank issuers; (3) demand deposits; and (4) other checkable deposits (OCDs). M2 includes a broader set of financial assets held principally by households. M2 consists of M1 plus: (1)...
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