Inflation can be a at a standstill even while the federal government pours money into the economy if the ''velocity of money'' is also sluggish. ''Velocity of money'' is how often a dollar is spent over a particular time period.
A non-moving standoff velocity of money will result in deflation. Even if the stock market lost trillions of dollars and the government decides to print money to pay off politicians' promises to lobbyists, nothing inflationary will take place until the velocity of money surges.
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 contrivance with the American taxpayer on the hook.
The government cannot print money out of thin air in order to solve the velocity of money dilemma. People will not amp up purchases with their money in the marketplace because they are afraid. Alarm makes them become more conservative in their buying habits.
Money is a benchmark of exchange arising out of people's savings. In an economy based on bartering, it would be impossible to exchange unequal items without an exchange touchstone. So, the government created a stable supply of money. If the velocity of money was stagnant and the supply of money enlarged, inflation would bring it into balance.
Insomuch as the government has created a debt crisis, until it is reduced, most authorities with sound financial credentials reason that confidence will wane. Even in the deflationary environment and economic crisis, the bottom will be reached. Eventually the velocity of money will improve and the economy will flow along more normally.
For the time being, the federal government has immensely inflated the supply of money. As communicated earlier, the inflation will take hold as the economy revs up and as the velocity of money improves. As all the extra printed money chasing a particular amount of goods and services, inflation will take hold in the same fashion.
So, the question is: how will you gauge when the increase in the velocity of money is taking place in the economy? Make sure you scan financial newspapers like the Wall Street Journal for their published Consumer Confidence index numbers. These is known as one of the ''leading indicators'' and highlight trends in the economy a few months before hard data bears them out.
The other premier financial signals that show change before the economy changes are: Gross Domestic Product (GDP) reports, Consumer Price Index (CPI) reports, the Producer Price Index (PPI), Employment Indicators, Retail Sales Index, the National Association of Purchasing Management Index (NAPM), the Consumer Confidence Index, Curable Goods Order report, Employment Cost Index (ECI) and the Productivity Report which measures calculated how much turnout is created by a unit of labor. Presented by Cool Checks
A non-moving standoff velocity of money will result in deflation. Even if the stock market lost trillions of dollars and the government decides to print money to pay off politicians' promises to lobbyists, nothing inflationary will take place until the velocity of money surges.
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 contrivance with the American taxpayer on the hook.
The government cannot print money out of thin air in order to solve the velocity of money dilemma. People will not amp up purchases with their money in the marketplace because they are afraid. Alarm makes them become more conservative in their buying habits.
Money is a benchmark of exchange arising out of people's savings. In an economy based on bartering, it would be impossible to exchange unequal items without an exchange touchstone. So, the government created a stable supply of money. If the velocity of money was stagnant and the supply of money enlarged, inflation would bring it into balance.
Insomuch as the government has created a debt crisis, until it is reduced, most authorities with sound financial credentials reason that confidence will wane. Even in the deflationary environment and economic crisis, the bottom will be reached. Eventually the velocity of money will improve and the economy will flow along more normally.
For the time being, the federal government has immensely inflated the supply of money. As communicated earlier, the inflation will take hold as the economy revs up and as the velocity of money improves. As all the extra printed money chasing a particular amount of goods and services, inflation will take hold in the same fashion.
So, the question is: how will you gauge when the increase in the velocity of money is taking place in the economy? Make sure you scan financial newspapers like the Wall Street Journal for their published Consumer Confidence index numbers. These is known as one of the ''leading indicators'' and highlight trends in the economy a few months before hard data bears them out.
The other premier financial signals that show change before the economy changes are: Gross Domestic Product (GDP) reports, Consumer Price Index (CPI) reports, the Producer Price Index (PPI), Employment Indicators, Retail Sales Index, the National Association of Purchasing Management Index (NAPM), the Consumer Confidence Index, Curable Goods Order report, Employment Cost Index (ECI) and the Productivity Report which measures calculated how much turnout is created by a unit of labor. Presented by Cool Checks
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