A Forward Look

[jarrett1]

Its one thing to "see" what's around you it's another thing to do something about...what we try to do is separate what we feel from what we need to do.

It's not about your opinion, its about your course of action...so we can all see right through you!

Good observation...the markets have been up for 6 years now...good boy!

[flow5]

Velocity of WHAT?  Vt (Irving Fisher's transaction concept of "money" velocity, or money actually exchanging hands), rose - after bottoming in March 2009.  People's incomes haven't leaped (and more people are working), and the price level (P, the average price of all transaction units), has not kept pace with the Fed's mandate (i.e., the conventional measure of "M" doesn't represent people's incomes).   So, the only way gDp (T, the volume of transaction units), can rise is for their "means-of-payment" money to turn over faster (another example of where Vt has moved in the opposite direction of Vi).  I.e., the volume of bank debits (M*Vt), had to increase.

The Keynesian concept of money of money velocity (income velocity), is a contrived metric (make believe).  Vi has been distorted because of changes to both the numerator (slower growth), and the denominator (deposit classification shifts).  The widespread idea that "money growth may be offset by declining money velocity" is completely false.  What has changed is the use or non-use of voluntary savings (where S=I, or where savings are "put to work").  It's the productive utilization of savings (matching funds with real-investment), that increases wages and the consumption of: goods and services.  Vi provides no tool by which we can dissect and explain either economic growth or the inflation process.