Even if the government pumps money into the economy, an inflated economy cannot take off if the velocity of money is also not moving. ''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 stalemate. 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 debt 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 velocity of money situation will never be mended by printing money. People will only hold on to their savings and not buying as much because they are worried about the future. When they are rattled, people generally act more reserved in their buying habits until their fears run dry.
The whole system of money changing hands arises out of people saving their money. In a barter economy, equal units of exchange are essential for a proper touchstone of exchange. So, a standard supply of money was created. If the money supply expanded and the velocity of money was stagnant, inflation would balance it out again.
Because the government has created a debt crisis, until it is reduced, most economists conclude 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 government has greatly inflated the amount of money it generates. When the economy eventually takes off and the velocity of money improves, so inflation will also. As consumer confidence increases and all the extra printed money follows after a set number of services and goods, inflation will surge correspondingly.
This is the issue: when will you realize that confidence and money velocity increases are taking place? Read the Wall Street Journal and other newspapers and sources recognized 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 outstanding economic guides 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 evaluated how much output is created by a unit of labor. Presented by Cool Checks
There is no money to magnify growth if the ''velocity of money'' is at a stalemate. 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 debt 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 velocity of money situation will never be mended by printing money. People will only hold on to their savings and not buying as much because they are worried about the future. When they are rattled, people generally act more reserved in their buying habits until their fears run dry.
The whole system of money changing hands arises out of people saving their money. In a barter economy, equal units of exchange are essential for a proper touchstone of exchange. So, a standard supply of money was created. If the money supply expanded and the velocity of money was stagnant, inflation would balance it out again.
Because the government has created a debt crisis, until it is reduced, most economists conclude 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 government has greatly inflated the amount of money it generates. When the economy eventually takes off and the velocity of money improves, so inflation will also. As consumer confidence increases and all the extra printed money follows after a set number of services and goods, inflation will surge correspondingly.
This is the issue: when will you realize that confidence and money velocity increases are taking place? Read the Wall Street Journal and other newspapers and sources recognized 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 outstanding economic guides 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 evaluated how much output is created by a unit of labor. Presented by Cool Checks
About the Author:
Another astute way to save money is to purchase your bank checks online. You will save fifty percent PLUS there is more variety to choose from and an added avenue to express your good taste with quality designer bank checks. For top-notch selection go to Cool Checks
No comments:
Post a Comment