{"id":15460,"date":"2015-12-19T09:45:08","date_gmt":"2015-12-19T14:45:08","guid":{"rendered":"http:\/\/olduvai.ca\/?p=15460"},"modified":"2015-12-19T09:45:08","modified_gmt":"2015-12-19T14:45:08","slug":"the-velocity-of-the-american-consumer","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=15460","title":{"rendered":"The Velocity of the American Consumer"},"content":{"rendered":"

The Velocity of the American Consumer<\/a><\/h3>\n

I was reading something yesterday by my highly esteemed fellow writer Charles Hugh Smith that had me first puzzled and then thinking \u2018I don\u2019t think so\u2019, in the same vein as Mark Twain\u2019s recently over-quoted quote:<\/p>\n

\u201cIt ain\u2019t what you don\u2019t know that gets you into trouble. It\u2019s what you know for sure that just ain\u2019t so.\u201d<\/i><\/p><\/blockquote>\n

I was thinking that was the case with Charles\u2019 article. I was sure it just ain\u2019t so. As for Twain, I\u2019m more partial to another quote of his these days (though it has absolutely nothing to do with the topic:<\/p>\n

\u201cEat a live frog first thing in the morning, and nothing worse will happen to you the rest of the day.\u201d<\/i><\/p><\/blockquote>\n

Told you it had nothing to do with anything.<\/p>\n

Charles\u2019 article deals with money supply and the velocity of money. Familiar terms for Automatic Earth readers, though we use them in a slightly different context, that of deflation. In our definition, the interaction between the two (with credit added to money supply) is what defines inflation and deflation, which are mostly -erroneously- defined as rising or falling prices.<\/p>\n

I don\u2019t want to get into the myriad different definitions of \u2018money supply\u2019, and for the subject at hand there is no need. The first FRED graph below uses TMS-2 (True Money Supply 2 consists of currency in circulation + checking accounts + sweeps of checking accounts + savings accounts). The second one uses M2 money stock. Not the same thing, but good enough for the sake of the argument.<\/p>\n

In his piece, Charles seems to portray the two, money supply and velocity of money, as somehow being two sides of the same coin, but in a whole different way than we do. He thinks that the money supply can drive velocity up or down. And that\u2019s where I think that just ain\u2019t so. I also think he defeats his own thesis as he goes along.<\/p>\n

…click on the above link to read the rest of the article…<\/p>\n","protected":false},"excerpt":{"rendered":"

The Velocity of the American Consumer I was reading something yesterday by my highly esteemed fellow writer Charles Hugh Smith that had me first puzzled and then thinking \u2018I don\u2019t think so\u2019, in the same vein as Mark Twain\u2019s recently over-quoted quote: \u201cIt ain\u2019t what you don\u2019t know that gets you into trouble. It\u2019s what […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2],"tags":[2674,127,1185,10977,954,2532,4924,7738],"class_list":["post-15460","post","type-post","status-publish","format-standard","hentry","category-economics","tag-automatic-earth","tag-charles-hugh-smith","tag-consumers","tag-money-stock","tag-money-supply","tag-money-velocity","tag-oftwominds","tag-raul-meijer"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/15460","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=15460"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/15460\/revisions"}],"predecessor-version":[{"id":15461,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/15460\/revisions\/15461"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=15460"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=15460"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=15460"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}