It’s time to call a bean a bean especially since now millions of Americans are living on beans. The banks are not lending. Small Business is dying. Unless Glass Stegall is reinstated and the large banks broken up and their chiefs indited for fraud and sent to jail it really doesn’t look like America will ever pull out of this. So it’s the new great depression but rather than four years it’s a hundred years. We call it the GREST depression (short for the greatest depression) and before it’s over there will be cannibals in the streets. Gee thanks guys!
Velocity of money is the frequency with which a unit of money is spent on new goods and services. It is a far better indicator of economic activity than GDP, consumer prices, the stock market, or sales of men’s underwear (which Greenspan was fond of ogling). In a healthy economy, the same dollar is collected as payment and subsequently spent many times over. In a depression, the velocity of money goes catatonic. Velocity of money is calculated by simply dividing GDP by a given money supply. This VoM chart using monetary base should end any discussion of what ”this” is and whether or not anybody should be using the word “recovery” with a straight face: