Even if the government pumps money into the economy, an inflated economy cannot take off if the velocity of money is also passive and unmoving. ''Velocity of money'' is the rate whereby a dollar is spent over a certain period of time.
There is no money to magnify growth if the ''velocity of money'' is at a gridlock. Even if Wall Street loses trillions of dollars and the government wantonly prints money to finance ill-conceived lobbyist paybacks, inflation will not occur until the velocity of money moves again.
The wacky Keynesian economic theory holds that one can "stimulate" the economy by deficit spending. Leveraging or stimulating the economy cannot work if the stimulus is via debt. You cannot spend your way out of in the hole liability by borrowing more money. This type of risk profile begins to look like a gigantic Ponzi scheme with the American taxpayer on the hook.
The velocity of money situation is not repaired by printing money. People are holding onto their money and not buying as much because they are worried about the future. When they are shaken, people generally act more reserved in their buying habits until their fears dissipate.
Money is a standard of exchange created out of savings. In a barter economy, it would be difficult to exchange unequal units of production without a yardstick of exchange. Therefore a stable supply of money was created. If the velocity of money stayed the same and the money supply increased, inflation would bring the equation into balance again.
If the government has created a deficit crisis, until it is looking like it can be paid off, international confidence and consumer confidence in the dollar will flounder. A all-time low base will be reached even in a huge economic crisis. In the end, the economy will eventually flow again normally and the velocity of money will move also.
For the time being, the government has inflated the money supply gigantically. When the velocity of money improves and the economy takes off, so will inflation. As confidence improves and all the extra printed money begins chasing a set amount of goods and services, inflation will ramp up accordingly.
Nonetheless, here is the question: when will you realize that confidence and money velocity increases are taking place? Read the Wall Street Journal and alternative newspapers and sources known for their financial sections and check the Consumer Confidence Index's numbers. These numbers are known as ''leading indicators'' and reveal economic trends well before they are observed by hard data.
The other well-known bread-and-utter indicators that show change before the economy changes are: the Producer Price Index (PPI), Employment Indicators, Retail Sales Index, the National Association of Purchasing Management Index (NAPM), Curable Goods Order report, Gross Domestic Product (GDP) reports, Consumer Price Index (CPI) reports, Employment Cost Index (ECI) and the Productivity Report which calculated how much turnout is created by a unit of labor. Provided by Cool Checks
There is no money to magnify growth if the ''velocity of money'' is at a gridlock. Even if Wall Street loses trillions of dollars and the government wantonly prints money to finance ill-conceived lobbyist paybacks, inflation will not occur until the velocity of money moves again.
The wacky Keynesian economic theory holds that one can "stimulate" the economy by deficit spending. Leveraging or stimulating the economy cannot work if the stimulus is via debt. You cannot spend your way out of in the hole liability by borrowing more money. This type of risk profile begins to look like a gigantic Ponzi scheme with the American taxpayer on the hook.
The velocity of money situation is not repaired by printing money. People are holding onto their money and not buying as much because they are worried about the future. When they are shaken, people generally act more reserved in their buying habits until their fears dissipate.
Money is a standard of exchange created out of savings. In a barter economy, it would be difficult to exchange unequal units of production without a yardstick of exchange. Therefore a stable supply of money was created. If the velocity of money stayed the same and the money supply increased, inflation would bring the equation into balance again.
If the government has created a deficit crisis, until it is looking like it can be paid off, international confidence and consumer confidence in the dollar will flounder. A all-time low base will be reached even in a huge economic crisis. In the end, the economy will eventually flow again normally and the velocity of money will move also.
For the time being, the government has inflated the money supply gigantically. When the velocity of money improves and the economy takes off, so will inflation. As confidence improves and all the extra printed money begins chasing a set amount of goods and services, inflation will ramp up accordingly.
Nonetheless, here is the question: when will you realize that confidence and money velocity increases are taking place? Read the Wall Street Journal and alternative newspapers and sources known for their financial sections and check the Consumer Confidence Index's numbers. These numbers are known as ''leading indicators'' and reveal economic trends well before they are observed by hard data.
The other well-known bread-and-utter indicators that show change before the economy changes are: the Producer Price Index (PPI), Employment Indicators, Retail Sales Index, the National Association of Purchasing Management Index (NAPM), Curable Goods Order report, Gross Domestic Product (GDP) reports, Consumer Price Index (CPI) reports, Employment Cost Index (ECI) and the Productivity Report which calculated how much turnout is created by a unit of labor. Provided by Cool Checks
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