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Offline Eddie

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Velocity of Money.....or the Absence Thereof......
« on: May 26, 2020, 07:56:36 AM »
This is a typical goldbug biased infomercial.  Provided for amusement purposes.

There is no inflation....so people are buying gold to hedge for inflation. Riggghhtttt!!!!

I am waiting for gold to be capped hard at some point...because they can, and will. Buying gold now is probably not a terrible idea...for anybody who has the money (I don't)....but I don't view it as an exceptionally strategic move......cash would be better, because at some point you can spend it on what are likely to be bargains. Gold is no bargain at these prices.



Inflation ahead? US velocity of money hits multi-decade lows
NEWS | 00:58 GMT | By Omkar Godbole


The US velocity of money, as measured by the M2 money stock ratio quarterly seasonally adjusted, has declined to 1.374, the lowest level since at least 1960s, as per the data tweeted by Jeroen Blokland, Portfolio Manager for the Robeco Multi-Asset funds.



The velocity of money equals the average number of times an average dollar is used to buy goods and services per unit of time. Inflation depends on growth in the money supply and velocity of money.

While the Federal Reserve has increased the money supply by leaps and bounds over the years and more so recently to ensure the smooth functioning of credit markets amid the coronavirus crisis, the velocity of money has tanked.

As a result, a sharp rise in inflation looks unlikely. Even so, gold, a hedge against inflation, could continue to rise on the back of the Fed's unprecedented balance sheet expansion. The yellow metal has already gained over 10% this year and was last seen trading at $1,730 per ounce.

https://www.fxstreet.com/news/inflation-ahead-us-velocity-of-money-hits-multi-decade-lows-202005260058

« Last Edit: May 26, 2020, 08:04:10 AM by Eddie »
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Offline Eddie

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Re: Velocity of Money.....or the Absence Thereof......
« Reply #1 on: May 27, 2020, 09:06:16 AM »
Remember when I said gold was gonna get capped hard? It seems like it was just yesterday...oh wait, it was yesterday. How did I know this? Because the Fed is nothing if not predictable.

Gold Hammered Lower On Heavy Volume. Chinese Yuan Slammed

Profile picture for user Tyler Durden
by Tyler Durden
Wed, 05/27/2020 - 08:28

Yesterday saw the dollar, yuan, and gold all pushed lower - an unusual event - but this morning the threesome is more chaotic.

Chinese Yuan is extending last night's losses...





The Dollar has roundtripped from early weakness to unchanged...



Gold is getting hammered lower on heavy volume (as futures contracts roll)...

https://zh-prod-1cc738ca-7d3b-4a72-b792-20bd8d8fa069.storage.googleapis.com/s3fs-public/styles/inline_image_desktop/public/inline-images/2020-05-27_5-20-03.jpg?itok=Jn_WpunA


And Silver is outperforming, pushing the gold-silver ratio back below 100x...



And gold in yuan back into its recent range...





Something is going on behind the scenes.

https://www.zerohedge.com/markets/gold-hammered-lower-heavy-volume-chinese-yuan-slammed

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Offline Surly1

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Re: Velocity of Money.....or the Absence Thereof......
« Reply #2 on: May 27, 2020, 09:59:02 AM »
Remember when I said gold was gonna get capped hard? It seems like it was just yesterday...oh wait, it was yesterday. How did I know this? Because the Fed is nothing if not predictable.

Gold Hammered Lower On Heavy Volume. Chinese Yuan Slammed

Pretty good as predictions go. Commodities trading next?
"Do not be daunted by the enormity of the world's grief. Do justly now, love mercy now, walk humbly now. You are not obligated to complete the work, but neither are you free to abandon it."

Offline Eddie

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Re: Velocity of Money.....or the Absence Thereof......
« Reply #3 on: May 27, 2020, 10:09:28 AM »
Remember when I said gold was gonna get capped hard? It seems like it was just yesterday...oh wait, it was yesterday. How did I know this? Because the Fed is nothing if not predictable.

Gold Hammered Lower On Heavy Volume. Chinese Yuan Slammed

Pretty good as predictions go. Commodities trading next?

Been there, done that, Got my ass handed to me, long ago now. Where I learned about the down side of leverage.
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Offline Eddie

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Re: Velocity of Money.....or the Absence Thereof......
« Reply #4 on: May 27, 2020, 10:13:09 AM »
My only financial goal at the moment is stop bleeding red ink and to reduce my debt. In general it is a time to hoard cash...which is a problem for the Fed, but good for most individuals.
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Offline Surly1

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Re: Velocity of Money.....or the Absence Thereof......
« Reply #5 on: May 27, 2020, 10:15:16 AM »
My only financial goal at the moment is stop bleeding red ink and to reduce my debt. In general it is a time to hoard cash...which is a problem for the Fed, but good for most individuals.

Understood.

I read about commodes a couple of decades ago, and decided that they were nothing a peasant should get involved in without an impeccable source of insider knowledge and seven figures worth of disposable cash to play with. Neither applied to me.
"Do not be daunted by the enormity of the world's grief. Do justly now, love mercy now, walk humbly now. You are not obligated to complete the work, but neither are you free to abandon it."

Offline Eddie

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Re: Velocity of Money.....or the Absence Thereof......
« Reply #6 on: May 27, 2020, 10:23:40 AM »
If...if the government wanted to help guys like me, they could offer a loan of a serious amount (not just a month's gross, which is chump change). 

if I could borrow say 1.5 million right now...at 1% for 15 years, I would spend the shit out that money to invest in myself and my business. They should think about that, but they won't. Only the elites get that kind of opportunity.
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Offline Eddie

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Re: Velocity of Money.....or the Absence Thereof......
« Reply #7 on: May 28, 2020, 09:37:31 AM »
So...this is just me talking.

I keep reading about the Fed going to negative rates....enough to make me think it could happen. It is politically difficult for the global banking cartel, because Europe would have to lower their rates even more..and they have negative rates already.

My gut says the stimulus so far is way too puny....many of the stats that matter will only be visible months from now, and if they're worse than they think (and they probably will be) then we'll see even more money printing....but as always, it will go to the wrong citizens...the ones who already have nearly all the assets. The idea of helicopter money to Joe Average is not palatable to the banking class. And the pols are adept at coming up with new conduit schemes to funnel any government bailout towards the "constituents" they value, the corporations..and towards their elite families and friends.

Trump's idea of infrastructure is apt to be more Trump resorts, I'm afraid. That's how these pigs at the trough think.

Right now feels like a Wiley Coyote moment. We aren't falling, but we're standing on thin air holding an anvil.

With the talk about negative rates, that is putting more upward pressure on gold...so the gold market will be smacked a little every time they exceed about a   $30.day gain.....and occasionally really gobsmacked to really keep it under control.

Right now they ought to be sending out a lot more stimulus checks..but they won't until they see that they woefully underestimated the need for it.

AFAIK. there are no good real time stats for single family rental defaults.....the only one that gets looked at is apartments, which so far is not too bad, About 90% of apartment dwellers paid their May rent...which is off a couple of percent below normal....but not horrible.

But food banks are overrun with hungry people waiting in line for a few groceries..it isn't good. And we are still run by guys like McConnell, who are austerity loving, tax the poor and bailout the rich, power mad assholes.
What makes the desert beautiful is that somewhere it hides a well.

Offline Eddie

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Re: Velocity of Money.....or the Absence Thereof......
« Reply #8 on: June 03, 2020, 08:37:33 AM »
Gold is getting capped again today. Gold price will go where the Fed wants it to go.

Screen Shot 2020 06 03 at 10 32 01 AM
Screen Shot 2020 06 03 at 10 32 01 AM

All markets are fully rigged...because the people who rule the world have unlimited leverage and no worries about government regulators. Governments are actually highly complicit.
What makes the desert beautiful is that somewhere it hides a well.

Offline Eddie

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Re: Velocity of Money.....or the Absence Thereof......
« Reply #9 on: June 03, 2020, 09:43:39 AM »
Anytime I hear the Fed repeatedly denying something.....it makes me suspicious that it might happen.

Jerome Powell has been saying for a while that negative interest rates were "not an appropriate tool" for the Fed to use in the US.  It is generally accepted by people that understand collapse that negative interest rates are coming, sooner or later. 

The Fed's real problem with it is that it will destabilize the European banks....he never mentions that part.....

To make negative interest rates work over the long haul, cash will have to be eliminated or at least severely restricted. This is the bitter pill for ordinary people....it means all financial transactions will be transparent and public and the IRS can then go after all the black market stuff.....which is huge, btw.



INTEREST RATES

Negative interest rates could be needed for a ‘V’ recovery, Fed economist says

PUBLISHED TUE, JUN 2 20202:51 PM EDTUPDATED 2 HOURS AGO
Jeff Cox

Policymakers “will need to consider negative interest rates” in getting the U.S. economy back to health, St. Louis Fed economist Yi Wen said in a paper.

Most Fed officials have doubted they would go negative like Japan and parts of Europe.

The analysis is not binding in any way on the Fed, and Chairman Jerome Powell recently said he doesn’t see below-zero policy rates as “an appropriate tool.”

.Getting the U.S. economy back to strong growth could require negative interest rates, according to a St. Louis Federal Reserve economist.

As many economists dismiss the likelihood of the current record-breaking slump being followed by an equally aggressive recovery, central bank economist Yi Wen said in a paper on the St. Louis Fed’s website that achieving that kind of a rebound is necessary and possible.

The key, he said, is using aggressive stimulus even beyond what authorities deployed during the financial crisis, and that could include taking interest rates below zero.

Wen compared the response to two major U.S. economic downturns: the Great Depression and the financial crisis. He found that the use of aggressive fiscal response through President Franklin Delano Roosevelt’s New Deal helped generate a V-shaped recovery after the Depression, while primarily monetary responses like low interest rates and Fed asset purchases during the financial crisis produced an L-shaped recovery in which GDP failed to reach potential.

“I found that a combination of aggressive fiscal and monetary policies is necessary for the U.S. to achieve a V-shaped recovery in the level of real GDP,” Wen wrote. “Aggressive policy means that the U.S. will need to consider negative interest rates and aggressive government spending, such as spending on infrastructure.”

Wen said the combination of policies will be needed so the U.S. can generate an S-shaped pattern, in which growth starts slowly and then quickly bursts higher. Without it, “the economic consequences of the coronavirus pandemic will be permanent,” he wrote.

Not ‘an appropriate tool’

Fed Chairman Jerome Powell and other central bank officials have been emphasizing the possibility that more fiscal measures will be needed. Congress has passed the $2.2 trillion CARES Act, but Fed officials said higher public spending could be needed as the economic crisis lingers.

But Powell and his colleagues also have expressed strong doubts about whether negative interest rates would ever be used in the U.S., as they have in Europe and Japan. They cite little evidence that below-zero yields are effective, and Powell pointed out, in a discussion last week, that they tend to be detrimental to banks.

“We don’t think that’s an appropriate tool here in the United States,” Powell told former Fed Vice Chair and now Princeton University economist Alan Blinder. “I would say the evidence on whether it actually works is mixed. There are clearly some negative side effects, as there sometimes are with these things, and it’s just not clear to my colleagues and to me on the Federal Open Market Committee that this is a tool that would be appropriate to deploy here in the United States.”

Indeed, Wen’s paper is merely one observation on the issue and is in no way binding on the Fed as a whole.

While stopping short of going negative, the Fed has pulled its primary policy level that serves a baseline for many other rates down to near zero. It also is purchasing bonds again, though this time with more of a focus on market functioning than as an economic stimulus.

Short-term Treasury yields occasionally have dipped into negative territory, and traders in the fed funds futures market are indicating that the Fed’s benchmark could dip slightly below zero starting in May 2021.

Wen added that negative rates by themselves won’t be enough stimulus to return an economy that had been growing at a solid pace back to its former self.

“Importantly, these policies also need to continue even when the crisis is about to end to provide a further boost, leading to a more robust recovery,” he wrote. “Furthermore, it’s the combination and coordination of both monetary and fiscal policies that provides enough stimulus for a V-shaped recovery. In other words, aggressive monetary policy — such as negative interest rates — may be ineffective on its own without aggressive fiscal stimulus.”





https://www.cnbc.com/2020/06/02/negative-interest-rates-could-be-needed-for-a-v-recovery-fed-economist-says.html
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Offline luciddreams

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Re: Velocity of Money.....or the Absence Thereof......
« Reply #10 on: June 03, 2020, 10:04:40 AM »


To make negative interest rates work over the long haul, cash will have to be eliminated or at least severely restricted. This is the bitter pill for ordinary people....it means all financial transactions will be transparent and public and the IRS can then go after all the black market stuff.....which is huge, btw.


I've been thinking that the pandemic would leave us with a move towards cashless with a new global currency.  It feels like that's how they would roll it out.  It would be no more cash and one global currency.  Then again I don't think that there is enough cooperation yet among the major governments of the world.  I think we are getting close to that though.  I think I will see it in my life to be sure. 

I believe a cashless society is inevitable.   It would be very easy for the majority of us to transition to that because most people already don't need to use cash.  I seldom ever have cash on me.  I use plastic to deduct my digibits from my accounts in literally every in person transaction.  It's just more convenient and secure.  A thug can rob your cash and spend it.  He can't rob your cards and spend it.  If he leaves you alive you get on your personal screen and lock accounts in minutes.  Not to mention money is literally filthy.  With something like covid going on who wants to be touching physical money if they don't have to? 

Just an aside here, for the humor...

A few months ago my youngest son found reason to put a penny on his lips.  He's 7.  Young kids do stupid shit for no reason as a general rule.  I decided to teach him a lesson with humor.  My oldest son, 10, was sitting in the room for this.  I wanted to teach him about how dirty money is. 

"Do you have any idea how filthy money is son?"

"I don't know," look of confusion and dad's a dickhead on his face.

"Well how do you know that somebody didn't decide that they wanted to put that penny up their butt hole?"

Look of terror on his face.  "Nuh uhhh."

"Well you can't know can you.  Somebody might have decided that they wanted to stick that penny right up their butt hole.  Then there you are putting it on your mouth."  Oldest son busting a gut laughing at his little brother now.  "So maybe don't put money on your mouth."

Youngest son puts penny down with look of disgust.  I don't think he's touched money since  :roll2:

     




Offline RE

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Re: Velocity of Money.....or the Absence Thereof......
« Reply #11 on: June 03, 2020, 10:36:14 AM »
I use Plastic for nearly everything already anyhow, so this makes no difference to me.  If I want to hire a neighbor to do some off the books work for me, I do barter.  A fifth of Vodka gets me an hour of labor.   :icon_sunny:  Or a pack of smokes.  A Carton is a full day's wages.  :icon_sunny: :icon_sunny:

You can barter FOOD also of course.  Alaska Grown Potatoes come in slightly under $1/lb, so 15-20 lbs is a good hourly wage if you grow potatoes.  In Edo Japan circa 1500AD or so, in fact the units of currency were Koku, which measured how much rice a person needed per year to live.  That was 1 Koku.

RE
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Offline Eddie

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Re: Velocity of Money.....or the Absence Thereof......
« Reply #12 on: June 03, 2020, 10:52:47 AM »


To make negative interest rates work over the long haul, cash will have to be eliminated or at least severely restricted. This is the bitter pill for ordinary people....it means all financial transactions will be transparent and public and the IRS can then go after all the black market stuff.....which is huge, btw.


I've been thinking that the pandemic would leave us with a move towards cashless with a new global currency.  It feels like that's how they would roll it out.  It would be no more cash and one global currency.  Then again I don't think that there is enough cooperation yet among the major governments of the world.  I think we are getting close to that though.  I think I will see it in my life to be sure. 

I believe a cashless society is inevitable.   It would be very easy for the majority of us to transition to that because most people already don't need to use cash.  I seldom ever have cash on me.  I use plastic to deduct my digibits from my accounts in literally every in person transaction.  It's just more convenient and secure.  A thug can rob your cash and spend it.  He can't rob your cards and spend it.  If he leaves you alive you get on your personal screen and lock accounts in minutes.  Not to mention money is literally filthy.  With something like covid going on who wants to be touching physical money if they don't have to? 

Just an aside here, for the humor...

A few months ago my youngest son found reason to put a penny on his lips.  He's 7.  Young kids do stupid shit for no reason as a general rule.  I decided to teach him a lesson with humor.  My oldest son, 10, was sitting in the room for this.  I wanted to teach him about how dirty money is. 

"Do you have any idea how filthy money is son?"

"I don't know," look of confusion and dad's a dickhead on his face.

"Well how do you know that somebody didn't decide that they wanted to put that penny up their butt hole?"

Look of terror on his face.  "Nuh uhhh."

"Well you can't know can you.  Somebody might have decided that they wanted to stick that penny right up their butt hole.  Then there you are putting it on your mouth."  Oldest son busting a gut laughing at his little brother now.  "So maybe don't put money on your mouth."

Youngest son puts penny down with look of disgust.  I don't think he's touched money since  :roll2:

     

I suspect this happened to RE too....... at a very early age.
What makes the desert beautiful is that somewhere it hides a well.

Offline RE

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Re: Velocity of Money.....or the Absence Thereof......
« Reply #13 on: June 03, 2020, 10:56:54 AM »


To make negative interest rates work over the long haul, cash will have to be eliminated or at least severely restricted. This is the bitter pill for ordinary people....it means all financial transactions will be transparent and public and the IRS can then go after all the black market stuff.....which is huge, btw.


I've been thinking that the pandemic would leave us with a move towards cashless with a new global currency.  It feels like that's how they would roll it out.  It would be no more cash and one global currency.  Then again I don't think that there is enough cooperation yet among the major governments of the world.  I think we are getting close to that though.  I think I will see it in my life to be sure. 

I believe a cashless society is inevitable.   It would be very easy for the majority of us to transition to that because most people already don't need to use cash.  I seldom ever have cash on me.  I use plastic to deduct my digibits from my accounts in literally every in person transaction.  It's just more convenient and secure.  A thug can rob your cash and spend it.  He can't rob your cards and spend it.  If he leaves you alive you get on your personal screen and lock accounts in minutes.  Not to mention money is literally filthy.  With something like covid going on who wants to be touching physical money if they don't have to? 

Just an aside here, for the humor...

A few months ago my youngest son found reason to put a penny on his lips.  He's 7.  Young kids do stupid shit for no reason as a general rule.  I decided to teach him a lesson with humor.  My oldest son, 10, was sitting in the room for this.  I wanted to teach him about how dirty money is. 

"Do you have any idea how filthy money is son?"

"I don't know," look of confusion and dad's a dickhead on his face.

"Well how do you know that somebody didn't decide that they wanted to put that penny up their butt hole?"

Look of terror on his face.  "Nuh uhhh."

"Well you can't know can you.  Somebody might have decided that they wanted to stick that penny right up their butt hole.  Then there you are putting it on your mouth."  Oldest son busting a gut laughing at his little brother now.  "So maybe don't put money on your mouth."

Youngest son puts penny down with look of disgust.  I don't think he's touched money since  :roll2:

     

I suspect this happened to RE too....... at a very early age.

Your supposition is as usual, quite wrong about me.  I have no problem with handling cash, even if it is dirty.  I don't put it in my mouth, and as far as dirty things go you touch them all the time.  Doorknobs, Toilet Flush handles etc.  More exposure to more forms of bacteria just gives your immune system a good workout.   :icon_sunny:

RE
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Offline RE

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Re: Velocity of Money.....or the Absence Thereof......
« Reply #14 on: June 03, 2020, 11:00:13 AM »


To make negative interest rates work over the long haul, cash will have to be eliminated or at least severely restricted. This is the bitter pill for ordinary people....it means all financial transactions will be transparent and public and the IRS can then go after all the black market stuff.....which is huge, btw.


I've been thinking that the pandemic would leave us with a move towards cashless with a new global currency.  It feels like that's how they would roll it out.  It would be no more cash and one global currency.  Then again I don't think that there is enough cooperation yet among the major governments of the world.  I think we are getting close to that though.  I think I will see it in my life to be sure. 

I believe a cashless society is inevitable.   It would be very easy for the majority of us to transition to that because most people already don't need to use cash.  I seldom ever have cash on me.  I use plastic to deduct my digibits from my accounts in literally every in person transaction.  It's just more convenient and secure.  A thug can rob your cash and spend it.  He can't rob your cards and spend it.  If he leaves you alive you get on your personal screen and lock accounts in minutes.  Not to mention money is literally filthy.  With something like covid going on who wants to be touching physical money if they don't have to? 

Just an aside here, for the humor...

A few months ago my youngest son found reason to put a penny on his lips.  He's 7.  Young kids do stupid shit for no reason as a general rule.  I decided to teach him a lesson with humor.  My oldest son, 10, was sitting in the room for this.  I wanted to teach him about how dirty money is. 

"Do you have any idea how filthy money is son?"

"I don't know," look of confusion and dad's a dickhead on his face.

"Well how do you know that somebody didn't decide that they wanted to put that penny up their butt hole?"

Look of terror on his face.  "Nuh uhhh."

"Well you can't know can you.  Somebody might have decided that they wanted to stick that penny right up their butt hole.  Then there you are putting it on your mouth."  Oldest son busting a gut laughing at his little brother now.  "So maybe don't put money on your mouth."

Youngest son puts penny down with look of disgust.  I don't think he's touched money since  :roll2:

     

I suspect this happened to RE too....... at a very early age.

Your supposition is as usual, quite wrong about me.  I have no problem with handling cash, even if it is dirty.  I don't put it in my mouth, and as far as dirty things go you touch them all the time.  Doorknobs, Toilet Flush handles etc.  More exposure to more forms of bacteria just gives your immune system a good workout.   :icon_sunny:

RE

One more thing, with FOOD I follow the 10 second rule.  If I drop some food on the floor while I am eating (happens fairly often these days) if I pick it up inside of 10 seconds and eat it, this is OK.   :icon_sunny:

RE
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