US money velocity at historic low
St Louis Fed figures show that the rate at which money changes hands is at it slowest since records began in 1959. The velocity of M2 is now 1.568, down from the historic high of 2.135 in mid-1997 – a reduction of 25.56%. The first 3 quarters of 2012 are all below the previous nadir in 1964.
Roughly speaking, for every 4 dollars spent at the end of the last Millennium, Americans are now spending 3.
But the money supply has not grown sufficiently to make up the shortfall (online figures only start from early November 1980, but the pattern is clear):
INVESTMENT DISCLOSURE: Mostly in cash (and index-linked National Savings Certificates), but now planning to build up some reserves of physical gold via regular saving.
DISCLAIMER: Nothing here should be taken as personal advice, financial or otherwise. No liability is accepted for third-party content.
2012-10-28 12:25:58
Source: http://broadoakblog.blogspot.com/2012/10/us-money-velocity-at-historic-low.html
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