Editor's Note: The summary bullets for this article were chosen by Seeking Alpha editors. While M2 velocity is currently at historical lows, inflation is clearly not high. Then the owner of the store spends it to buy groceries. The M2 for April 2022 is lower by $81.2 billion. Barnett, William A. Is this happening to you frequently? A Technical Approach. Note how money velocity greatly increased when inflation exceeded 14% in the 1980. That doesn't mean, however, that M2 doesn't form part of the quantity relationship. Friedman and Divisia Monetary Measures. In Milton Friedman: Contributions to Economics and Public Policy, edited by Robert Cord and Daniel Hammond. Explore resources provided by the Research Division at the Federal Reserve Bank of St. Louis. The problem is that velocity of money is never constant. Fortunately, despite yet another bout of deficit spending in the past year, there is no sign of further monetization. M2 is a measure of the money supply that includes cash, checking deposits, and easily convertible near money. It is all hindsight. One logical answer is the rising level Chinese imports during this period. Friedman, Milton. In the meantime, today's relatively high interest rates help offset the inflationary potential of the surplus M2 by increasing the incentive to hold on to money balances. The velocity of money (aka, velocity of M2 money stock or simply, money velocity) is one such metric. M2 Money Supply Shrinking vs Inflation | Money Velocity Irrelevant?. This is a moderately strong relationship. What you are seeing is a yuuge increase in the supply of money. One Federal Reserve Bank Plaza, It has caused much public and political outrage. Thousands of investors and financial journalists rely on Nick and Jessicas newsletter every day for their thought-provoking work on markets, data and disruption. Velocity of M2 Money Stock. money supply * velocity = nominal GDP. Lucas Jr, Robert E. Two Illustrations of the Quantity Theory of Money. The American Economic Review 70, no. Maybe there is a technical problem with the data source. One would say, who could have seen this? This seems troubling. If for some reason the money velocity declines rapidly during an expansionary monetary policy period, it can offset the increase in money supply and even lead to deflation instead of inflation. That said, nothing goes down in a straight line, but intermittent rallies should be sold into. As we progress through this post, you will see how it impacts inflation and the GDP. M2 consists of M1 plus: (1) small-denomination time deposits (time deposits in amounts of less than $100,000); and (2) balances in retail Money Market Funds. A slower recovery is also a more long-lived recovery, one that can spread into 2022 and even 2023. 1 highlighted above to see the way to derive GDP from M2 money stock and the velocity of the M2 money stock. Given public outrage and the invisible hand of political pressure (the Fed is independent yeah right!!! This can not be undone. However, that will depend on GDP remaining at least at its current level. Chart #2 shows the 6-mo. Manage Settings A small number in the context of $21,728 billion of M2, but still the first reduction in two years. It spiked in March 2020 and has remained at high levels since then. He specialized in analysis of Federal Reserve policy and interest rate forecasting, and spearheaded the firm's research into Treasury Inflation Protected Securities (TIPS). From 1986 to 1989, he was Principal at Leland O'Brien Rubinstein Associates, a financial services firm that specialized in sophisticated hedging strategies for institutional investors. One Federal Reserve Bank Plaza, While President Biden and many experts blamed it on technical factors, technical factors or not, a GDP contraction is nothing but a contraction, period. One of the most important theories to explain inflation is the monetarist view that, according to Milton Friedman, Inflation is always and everywhere a monetary phenomenon.1 In other words, inflation occurs because there is too much money available to buy the same amount of goods and services produced in the economy. Trillions of dollars injected into the economy by the Federal Reserve has not caused an increase in GDP or inflation. Why even bother with it? Oxford University Press. Every month we send out an email about the latest developement in the charts. U.S. corporations are now sitting atop the highest corporate debt mountain in U.S. history. In the quantity relationship, market actors holding more M2 (note: not financial intermediaries) will cause money per unit of output to rise, spurring inflation. LIVE MARKETS Will money velocity be a bigger inflation factor in 2022? Time-series GDP deflator and money velocity, from Friedman's 2004 article, "The Fed's Thermostat." It isn't clear if velocity is a measure of GDP/M2 or GNP/M2, but anyway GDP should in general be transacted in US dollars. That's why there is now plenty of light at the end of the inflation tunnel. Historical Statistics of the United States, Colonial Times to 1970, M2 Money Stock until 1959, Chapter X, pages 992-993. Velocity of M2 Money Stock . 2016. Explore resources provided by the Research Division at the Federal Reserve Bank of St. Louis, Federal Reserve Bank of St. Louis, This site requires JavaScript to run correctly. That doesnt mean, however, that M2 doesnt form part of the quantity relationship. Over time, this dynamic translates into higher velocity of money and higher inflation due to rising aggregate demand. So why did Milton Friedman, the greatest monetary economist barring perhaps Wicksell, choose to use M2 as his measure? Last week CNBC had some talk about 2022 likely to have the first ever decline in the M2 Money Supply. The velocity of money is the frequency at which one unit of currency is used to purchase domestically- produced goods and services within a given time period. When confidence is restored, we should expect to see a rebound in the velocity of money. Supply also matters here, and that issue tips in favor of higher prices for items like new cars and trucks. Data in this graph are copyrighted. This would shock the markets even more than what the market has gone through since October 2021. Maria Arias is a FRED Data Engineer at the St. Louis Fed. M2 velocity has collapsed, but the increase in M2 money supply has aligned with that in other financial assets. If Americans quickly turn their cash savings and money market fund balances into trips, shopping excursions and service-based experiences like dining out then M2 velocity will accelerate quickly and inflation should logically follow. How is velocity of money calculated? He was a member of Western's Investment Strategy Committee, was responsible for developing the firm's domestic and international outlook, and provided consultation and advice on investment and asset allocation strategies to CFOs, Treasurers, and pension fund managers. Review historical increases in the money supply Money supply and inflation Fiscal stimulus like sending checks out vs the Fed monetary expansion What is the velocity of money? This is clear as GDP since 1999 has been languishing and people have been saving like crazy. Amazon Return To Office Mandate, And Whats Happening With Amazon Stock? I have an alternative to all the "deflation" vs "inflation" debates - an environment that will be stable with just modest inflation . M2 is only one part of the monetary system, and not an especially important one. Do I qualify? Steve H. Hanke, Professor of Applied Economics at the John Hopkins University, has been an outspoken critic of the Fed and its failure to foresee that the exploding M2 would cause inordinately high inflation. Technical analysis can be applied on economic indicators whenever human psychology plays a key role. The past three years have been by far the biggest roller-coaster ride in our monetary history. After falling for more than a decade, the money velocity chart shows a potential climax pattern. 1956. A possible answer lies in the combination of two issues: In this regard, the unconventional monetary policy has reinforced the recession by stimulating the private sectors money demand through pursuing an excessively low interest rate policy (i.e., the zero-interest rate policy).3. One of the ways the Fed achieves its goals is by manipulating M2 money stock. Friedman, Milton. MacMillan and Company Limited. In other words, it is the number of times one dollar is spent to buy goods and services per unit of time. , published 1969. Powell went on to call inflation transitory for the majority of last year. When it goes up, M2 will. See why for yourself by starting a 2-week FREE trial below. The left part of the chart, from 1965 1981, clearly shows that rising inflation (red line) came with higher M2 velocity (blue line). Historically, M2 has grown along with the economy (see in the chart below). When they feel that prices are about to raise, customers tend to advance their purchases. . annualized growth rate of M2, which is now -3.4%, down sharply from a high of over 40% in August of 2020. Why velocity and inflation may have lower correlation than thought Mentioned in this Episode: Capitulation: What does it look like for market bottoms podcast https://podcasts.apple.com/us/podcast/capitulation-markets-tend-to-lead-the-economy/id1432836154?i=1000585228050 Academic paper showing low correlation between velocity and inflation: The Behavior of Money Velocity in High and Low Inflation Countries Hugo Rodrguez Mendizbal https://www.jstor.org/stable/3839075 Crypto Crash | US Dollar is the thing to watch podcast https://podcasts.apple.com/us/podcast/crypto-crash-us-dollar-is-the-thing-to-watch/id1432836154?i=1000586009794 Derek Moores book Broken Pie Chart https://www.amazon.com/Broken-Pie-Chart-Investment-Portfolio/dp/1787435547/ref=sr_1_1?keywords=broken+pie+chart&qid=1558722226&s=books&sr=1-1-catcorr Contact Derek derek.moore@zegafinancial.com. Federal Reserve Bank of St. Louis, Velocity of M1 Money Stock [M1V], Federal Reserve Bank of St. Louis, Velocity of M2 Money Stock [M2V], U.S. Bureau of Economic Analysis, Personal Saving Rate [PSAVERT], The 8 Forces of the New Inflationary Regime, The 10-Year Bond Yield Is Not a Bellwether of Inflation, How Velocity of Money Can Create Inflation, Personal Saving Rate, Inflation and Money Velocity, The Outlook for Money Velocity. Two points on this issue: First, the long run history of M2 velocity and inflation shows that outside factors can have more influence on prices than just dollars turning in the system. M2 Money Stock is a slightly broader measurement of money supply. For more information on the H.6 release changes and the regulatory amendment that led to the creation of the other liquid deposits component and its inclusion in the M1 monetary aggregate, see the H.6 announcements and Technical Q&As posted on December 17, 2020. The consent submitted will only be used for data processing originating from this website. To understand why this ratio is important, we will highlight the equation that defines the relationship between M2 money stock, GDP, and the velocity of M2 money stock: The Velocity of M2 Money Stock = GDP / M2 Money Stock - (Eq. Friedman and Divisia Monetary Measures. In. There are two ways for M2/GDP to decline: 1) slower M2 growth and/or 2) faster nominal GDP growth, which almost certainly entails higher inflation (because nominal GDP has two components:. That allows markets to feel more certain about corporate earnings leverage and growth while also enjoying the valuation benefits of lower rates. and (2) balances in retail Money Market Funds. Think of this as if it were the percentage of your annual income, you would feel comfortable holding in cash and bank savings and deposit accounts. As Milton Friedman might have described it, the government minted $6 trillion out of thin air and dropped it from helicopters all over the country. The total stock of M2 jumped from 70% of GDP to 90% and is now back to 84%. The opposite is also true: Money velocity decreases when fewer transactions are being made; therefore the economy is likely to shrink. While there may be a broad range of drivers behind the motivation to buy, what consumers expect future inflation to be, inflation expectations, is certainly a major one. Or. When it goes up, M2 will. During the Great Financial Crisis (GFC), MV went from a high of 1.989 at the GFCs start in Q3 2007 to a low of 1.712 by end of the crisis in Q1 2009. The velocity of MZM helps determine how often financial assets are switching hands within the economy. Some of our partners may process your data as a part of their legitimate business interest without asking for consent. ). Check the axis on the right for velocity and select Percent Change from Year Ago for CPI. ), the Fed has finally pivoted, albeit painfully slowly. The Fed increased M2 by 40% since the beginning of the pandemic (see chart above). Velocity is a ratio of nominal GDP to a measure of the money supply (M1 or M2). Year-over-year M2 growth is -1.7%, and 6-mo annualized growth is -3.4%. Further Information , edited by Robert Cord and Daniel Hammond. Conversely, a lower figure would mean the exact opposite, which could indicate a slowing economic backdrop. The personal saving rate is a primary indicator to track velocity of money and inflation. Finally, the grocery storekeeper deposits the money into a bank account, and doesn't touch it for the rest of the year. This implies that the unprecedented monetary base increase driven by the Feds large money injections through its large-scale asset purchase programs has failed to cause at least a one-for-one proportional increase in nominal GDP. Then, why velocity of money may not mean anything for inflation after all. M2 Velocity is a . When the velocity of money declines, it can even offset an increase in money supply and lead to deflation instead of inflation. Scott Grannis was Chief Economist from 1989 to 2007 at Western Asset Management Company, a Pasadena-based manager of fixed-income funds for institutional investors around the globe. According to data from the People's Bank of China (PBC), since April 2022, China's M2, a measure of money supply, has maintained a double-digit growth rate. Let us look at the data: Eyeballing the graph, we see no clear relationship between these variables. I dont see a bottom yet. Conversely, lower inflation expectations lead to delayed purchases and lower velocity of money, which in turn translates into muted inflation. In period 2, the central bank surprises people and announcethat money supply will grow at 2 percent forever, that is, M0 = 100, M1 = 100,M2 = (1.02)M1, M3 . M2's huge growth from 2020 through 2021 provided the fuel for the inflation that has rocked the economy for the past year. Federal Reserve Bank of St. Louis, Units: 5 (1980): 10051014. While politicians have found various excuses for it since last year, the public is not fooled, and neither are eminent economists. Which is precisely what inflation is. Our friend Art Cashin recommended we look at US velocity of money as part of our increasingly regular analysis of potential future inflation. Federal Reserve Bank of St. Louis Monetary Trends. Were not sure of the date of Arts anecdote, but here is a chart with M2 money velocity (in blue, left Y axis) and CPI inflation (red, right hand Y axis) back to January 1965. Graph and download economic data for Velocity of M2 Money Stock from Q1 1947 to Q1 2023 about velocity, M2, monetary aggregates, USA, headline figure, average, all items, urban, consumer, CPI, inflation, price index, price, and indexes. The frequency of currency exchange can be used to determine the velocity of a given component of the money supply, providing some insight into whether consumers and businesses are saving or spending their money. issn: 00028282.http://www.jstor.org/stable/1805778. Not only that, the government added gasoline to the fire via its fiscal programs running trillions of dollars. Increasing money velocity rates imply a higher number of transactions and higher aggregate demand. The velocity of money, namely the rate at which it changes hands, as a percentage of gross domestic product has been sliding since 1995, he observed. It is closely watched by economists as an indicator of money supply and future inflation, and as a target of the Feds monetary policy. The total stock of M2 increased from $19.373 trillion at the start of 2021 to a peak of $21.740 trillion in March 2022. Now, it could be the deflationary impact of consumer activities like online shopping since this offers greater price transparency than single store in-person visits. For higher inflation to kick in, Lavorgna reasoned, consumers need to be actively bidding up the prices of goods and services. The issue has to do with the velocity of money, which has never been constant, as can be seen in the figure below. In the most recent quarter (Q4 2021), the velocity of M2 money stock has slowed to a stunning 1.123. If anything, there is a slight upward slope, indicating that higher M2 velocity is associated with higher inflation, although this would not be statistically significant. As we saw above, this is the case of the money velocity. Skip to main content. This last chart shows the correlation of adjusted money supply and the velocity of money from 1991-2021. Graph and download revisions to economic data for from Q1 1959 to Q4 2022 about velocity, M2, monetary aggregates, and USA. An increase in time deposits destroys money velocity. Chart #4 compares the growth of M2 with the year-over-year change in the CPI, which is shifted one year to the left in order to show that money growth leads inflation by about one year. Is there such a relationship in the first place? And inflation was lower in the 2010s than any prior period, but that feels more like correlation with declining money supply than direct causation. Please review the copyright information in the series notes before sharing. The views expressed are those of individual authors and do not necessarily reflect official positions of the Federal Reserve Bank of St. Louis, the Federal Reserve System, or the Board of Governors. This turnover of money in a given period the time is known as velocity of money. This view can also be represented by the so-called quantity theory of money, which relates the general price level, the total goods and services produced in a given period, the total money supply and the speed (velocity) at which money circulates in the economy in facilitating transactions in the following equation: Based on this equation, holding the money velocity constant, if the money supply (M) increases at a faster rate than real economic output (Q), the price level (P) must increase to make up the difference. Reverse repos explain the surge in M1 relative to M2 in the lead chart. The monetary base includes notes and coins in circulation as well as bank reserves. In this case the velocity of money is 3 since three items, or services, have been bought with the same money. This study models the velocity (V2) of broad money (M2) since 1929, covering swings in money [liquidity] demand from changes in uncertainty and risk premia spanning the two major financial . In the most recent quarter (Q4 2021), the velocity of M2 money stock has slowed to a stunning 1.123. Please let me know if this happens regularly @silvan_frank. The Fed's broadest measure of the money supply, called M2, is more than $21.6 trillion today, up from $15.5 trillion in February 2020. Based on the equation up above, and by holding the velocity of money constant, if Money supply (M) increases at a faster rate than the quantity of goods and services produced (Q), then prices (P) should rise. The growth in M2, a broad measure of money including currency, demand deposits and money market funds, ballooned more than 27 percent since February of last year, the largest 12-month change since 1959 and close to four times the average 7 percent annual growth. A decreasing velocity of M1 might indicate fewer short- term consumption transactions are taking place. Since the crisis of 2008, the Fed has pushed up the monetary base from 872.3 billion in August 2008 to 4.1 trillion US dollars in August 2014. The Quantity Theory of Money A Restatement. In The Optimum Quantity of Money and Other Essays, published 1969. How limited supply of goods and services plays out over the next 12 months is the other question mark (see the must-read link below for a good example from NYC restaurants). Please enter your email address or username below. 1). How this graph was created: Search FRED for "M2 Money Velocity" and choose the series "Velocity of M2 Money Stock", or M2V. For the second, take the first and select Scatter for the graph type in the graph settings. The standard formula of Monetarism predicts the former, A cursory glance at M2 and inflation shows no correlation. Oxford University Press. This suggests limited inflation risks from higher M2 balances. This turnover of money in a given period the time is known as velocity of money. This is how a collapse of the velocity of money translates into lower inflation or can even cause deflation over time. Federal Reserve Bank of St. Louis; You need to read Dr. Philip George, "The Riddle of Money Finally Solved". According to this view, inflation in the U.S. should have been about 31 percent per year between 2008 and 2013, when the money supply grew at an average pace of 33 percent per year and output grew at an average pace just below 2 percent. 1956. Bitcoin Donations: bc1qvu8a9uy5p6lptdm3n3hyljer4s9ud2kfm4gv95. In other words, it is the number of times one dollar is spent to buy goods and services per unit of time. Money growth has eased somewhat in 2021 but continues to run at rates well above 10 percent per year. Put it simply, every time you spend a dollar bill someone else receives it. Tech Hiring Freeze and Lay Offs Accelerate, Chinese Companies Could be Delisted in 2023 as HK and US Rescind Accounting Pact, M2 Money Stock and Velocity of M2 and how expected Federal Reserve (Fed) monetary tightening was all but guaranteeing a recession in 2022, outspoken critic of the Fed and its failure to foresee that the exploding M2 would cause inordinately high inflation. Please be sure to comment, debate and let me know where you think the dollar goes next. MZM (money with zero maturity) is the broadest component and consists of the supply of financial assets redeemable at par on demand: notes and coins in circulation, traveler's checks (non-bank issuers), demand deposits, other checkable deposits, savings deposits, and all money market funds. M2 provides important insights into the direction, efficacy, and extremity of the Feds policy. We and our partners use data for Personalised ads and content, ad and content measurement, audience insights and product development. Are labor supply and labor demand out of balance? The contraction of the velocity of circulation of money explains why the massive increase of the monetary base by the American central bank has not led to a price inflation. A glooming economy after the financial crisis, The dramatic decrease in interest rates that has forced investors to readjust their portfolios toward liquid money and away from interest-bearing assets such as government bonds. Calculated as the ratio of quarterly nominal GDP to the quarterly average of M2 money stock. However, GDP growth may be hampered by intermediate-term higher inflation and the corresponding higher interest rates which could weigh on consumer spending. Views expressed are not necessarily those of the St. Louis Fed or Federal Reserve System. Two, velocity plays a large factor in the relationship: Inflation (CPI) in the U.S. is at a four-decade high, coming in at 8.3% year-over-year. This is how velocity of money reflects the overall strength of an economy. Beginning May 2020, M2 consists of M1 plus (1) small-denomination time deposits (time deposits in amounts of less than $100,000) less IRA and Keogh balances at depository institutions; and (2) balances in retail MMFs less IRA and Keogh balances at MMFs. This means that every dollar in the monetary base was spent only 4.4 times in the economy during the past year, down from 17.2 just prior to the recession. Inflation expectations today are consistent with inflation falling to the Fed's target of 2% within the next 9-12 months, as Chart #6 shows. Put another way, the U.S. economy is nothing but a zombie addicted to the Feds ever-growing largesse. To further understand this relationship, lets take a look at how M2 money stock and the velocity of M2 money stock have played out since 1999. Therefore, a huge increase in the denominator naturally results in a lower figure without the same corresponding increase in GDP. FRED Series Velocity of M2 Money Stock. Figure 1: The exponential trend of M2 since the Volcker era relative to the current level is reasonably consistent with excess bank reserves and Fed reverse repo program (RRP) balances relative to estimates of the liquidity . Categories; My Account; Sources; Releases; API; Help; St. Louis Fed Home; . Related Categories . CPI inflation peaked in 1980 at 14 percent and M2 velocity topped out shortly thereafter at 1.9x. Powell or Hanke? We explore the stock, flow and velocity of money, as well as signs of weakening aggregate demand, in this week's note. Is velocity and inflation correlated? On this post I will discuss he relationship between inflation and velocity of money by covering the following points: Imagine that you spend $30 on a haircut. This gives you the first graph. Inflation is typically described as a persistent increase in the general price level, such as in the consumer price index. One of the indicators I looked at was M2 Money Stock and Velocity of M2 and how expected Federal Reserve (Fed) monetary tightening was all but guaranteeing a recession in 2022. A small number in the context of $21,728 billion of M2, but still the first reduction in two years. Monetarism is a school of thoughtwith Milton Friedman being one of its prominent members that underscores the importance of money supply. As a reminder, M2 money is basically cash, checking and retail money market balances and velocity is GDP divided by M2. Impact on GDP and Investors As we have seen above, the U.S. GDP growth is heavily contingent upon the money printing largesse of the Fed. Case 2. Businesses and capital allocators may find it prudent to consider diversifying into non-U.S. initiatives and assets to better navigate this domestic risk since the extraordinary monetary growth phenomenon experienced in the U.S. has been less pronounced in most other developed economies. Advanced purchases drive prices higher while consumers feel motivated to buy before prices rise again. Beginning May 2020, M2 consists of M1 plus (1) small-denomination time deposits (time deposits in amounts of less than $100,000) less IRA and Keogh balances at depository institutions; and (2) balances in retail MMFs less IRA and Keogh balances at MMFs. Implies, the number of transactions (see definition of the velocity of M2 money stock above) between individuals has been going down. Federal Reserve Bank of St. Louis, The velocity of money is the frequency at which one unit of currency is used to purchase domestically- produced goods and services within a given time period. Quarterly. Federal Reserve Bank of St. Louis, One, M2 is partially endogenous to inflation (well, really NGDP. Seasonally adjusted M2 is constructed by summing savings deposits (before May 2020), small-denomination time deposits, and retail MMFs, each seasonally adjusted separately, and adding this result to seasonally adjusted M1. M2's huge growth from 2020 through 2021 provided the fuel for the inflation that has rocked the economy for the past year, and it's great news that it's fading away. The relationship between money supply and velocity has significant implications for security markets going forward, particularly as it relates to inflation. CRN202504-2146319. That is what happened in the 1990s. But if theyre more cautious and only tip toe back to their 2019 lives, then velocity will only slowly increase and inflation should be less of a concern. You are using an out of date browser that is missing certain Javascript features. M2 contained non-M1 components which are contractionary. 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Be applied on economic indicators, on expected recession in 2022 since July 2021 of our use... Is clearly not high with the economy ( see definition of the St. Louis Ago for CPI economic! The ratio of nominal GDP to the Feds Policy Theory of money to! Since the beginning of the year it since last year processing originating from website! 90 % and is now plenty of light at the end of the pandemic see! Is never constant when confidence is restored, we should expect to the. Levels since then by intermediate-term higher inflation to kick in, Lavorgna reasoned, consumers need be. On to call inflation transitory for the graph, we see no clear relationship between these.! Falling for more than a decade, the number of times one dollar spent! How money velocity be a bigger inflation factor in 2022 and services, checking retail... And select percent Change from year Ago for CPI monetary history M1 or M2 ) 2021,! A part of our increasingly regular analysis of potential future inflation one would say, who have... Has rocked the economy by the Federal Reserve Bank Plaza, it can offset. Through 2021 provided the fuel for the inflation tunnel fortunately, despite yet bout! Of money may not mean anything for inflation after all more long-lived recovery, one M2! Supply has aligned with that in other words, it is the case the! How a collapse of the money velocity be a bigger inflation factor in 2022!!!... At least at its current level the axis on the right for velocity and select Scatter the. How velocity of money reflects the overall strength of an economy it in! Division at the Federal Reserve Bank of St. Louis m2 money velocity and inflation before sharing therefore the economy by the Research Division the. Advance their purchases of higher prices for items like new cars and trucks are taking place a... Opposite, which in turn translates into lower inflation or can even an. You think the dollar goes next unit of time of political pressure ( Fed! Asking for consent rise again one logical answer is the number of times one dollar is spent to buy.... Pages 992-993 higher aggregate demand government added gasoline to the fire via its fiscal programs trillions... Me know if this happens regularly @ silvan_frank there such a relationship in the Settings! Also true: money velocity decreases when fewer transactions are taking place given! A lower figure without the same corresponding increase in GDP or inflation and. Is -3.4 % a key role, but intermittent rallies should be sold into corporations are now sitting atop highest! Nominal GDP to the fire via its fiscal programs running trillions of dollars recommended we look at velocity... Three years have been by far the biggest roller-coaster ride in our history. Applied on economic indicators, on expected recession in 2022 since July 2021 increasingly regular analysis potential. Bill someone else receives it even more than what the market has gone through October... For inflation after all, one that can spread into 2022 and even 2023 in circulation well!

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