This is your dollar in the hands of the FED. END THE FED. I like these charts because they paint a picture, especially when we pan back far enough that we can see things that we sometimes miss when focusing on the daily minutiae.
The next graph shows the FED's go-to metric for determining when to start their vaunted QE programs. When the 5-Year, 5-Year Forward Inflation Expectation Rate fell back towards or below 2.00 it was felt the economy needed the jolt of QE. Well, don't look now but it's baaaaaaack. SO either the Fed was wrong in the past or they are wrong now in taking monetary policy in the opposite direction via tightening and raising interest rates.
5-Year, 5-Year Forward Inflation Expectation Rate
2015-03-17:
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1.94
| |
2015-03-16:
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2.03
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2015-03-13:
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1.98
| |
2015-03-12:
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2.01
| |
2015-03-11:
|
1.99
|
Here is the Money Multiplier. When the economy is healthy, money (credit?) should multiply like bunnies. We see from this graph that the economy has not been healthy for quite some time, going back to the early-mid 90's.
#3 The Velocity Of Money
When an economy is healthy, money tends to change hands and circulate through the system quite rapidly. So it makes sense that the velocity of money fell dramatically during the last recession. But why has it kept going down since then?
M1 Money Multiplier
2015-03-04:
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0.786
| |
2015-02-18:
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0.768
| |
2015-02-04:
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0.733
| |
2015-01-21:
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0.703
| |
2015-01-07:
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0.737
|
Perhaps this is one of the only bright lights? This measure total debt in the economy, so perhaps more of the 'hair of the dog that bit you' strategy in play? That strategy seems to work for the alcoholic until......wait a minute are national monetary is running on strategy that the average alcoholic eventually, and many times tragically finds out doesn't work!?!?!
~;::::::;( )"> ¯\_( )_/¯
Commercial and Industrial Loans, All Commercial Banks
2015-02:
|
1,822.4856
| |
2015-01:
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1,796.6427
| |
2014-12:
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1,783.8925
| |
2014-11:
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1,756.3714
| |
2014-10:
|
1,738.6711
|
Seems like from an economic standpoint we have been headed down the Trail of Tears for a long, long time. And yet, some people still blindly and mindlessly defend the Fed, Fascinating.
The marginal productivity of debt measures the change in (dollar) economic output for a dollar change in the aggregate debt outstanding. Of course, when one takes these measurements they are historic and are merely mark man's progression in the current monetary stupidity. What has been happening to this measure over the decades?
The marginal productivity of debt measures the change in (dollar) economic output for a dollar change in the aggregate debt outstanding. Of course, when one takes these measurements they are historic and are merely mark man's progression in the current monetary stupidity. What has been happening to this measure over the decades?
Nominal debt outstanding has, of course, been accelerating rapidly and since 2008, the government's share of that has been soaring. Allowing for the short term variation – it can be seen that the trend in marginal productivity of debt has been most definitely down. Once the zero bound is reached, any incremental increase in aggregate debt will have a detrimental impact on the economy.
It can be seen that the ratio was around 1½ during the mid-1970s – meaning that for each dollar in marginal debt, $1.50's worth of GDP growth occurred. This ratio was as high as 3 in the 1950s. Deterioration in the ratio could be argued as deterioration in the quality of the debt. What would cause the quality of debt to decrease substantially? The removal of the ultimate extinguisher of debt: gold. Gold prevented & cleared the build-up of toxic unproductive debt.
Marginal Productivity of debt = (Change in nominal GDP)/(Change in nominal debt)
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