three charts on the speed of money
Jul. 15th, 2015 11:00 pm![[personal profile]](https://www.dreamwidth.org/img/silk/identity/user.png){kind=small}
solarbirdM1 Money Multiplier is a proxy - in some analysis systems, anyway - for total money multiplier, which is to say, how much money is being used to produce more net money. It's kind of a measure of not so much liquidity as it is capital productivity. M1 is a stand-in for total money supply since total money supply (including credit) is pretty damn hard to calculate, particularly since the M3 report was discontinued some years ago.
Money velocity is a measure of how many times a given unit of money changes hands via economic transactions. M1 money is cash, share draft accounts, and so on. Any money that's really easy to get ahold of, not including credit. M2 money is all that plus limited-withdrawal savings, money markets, and less liquid forms which are still basically cash - no credit is included. There are people who argue that money velocity is basically constant, but if anything will dissuade that argument, it's these charts.
This data has historically been interesting, but as you can see, we're still at impossible lows for a recovery which does in fact have some actual apparent traction. So I have to presume that these numbers are now fairly meaningless, given this data:
...which is to say, the banking system is still just sitting on nearly US$2.4TRILLION with a T in reserves, which is hanging out doing... fuck and all? Apparently?
Anybody know what's up with that?
Money velocity is a measure of how many times a given unit of money changes hands via economic transactions. M1 money is cash, share draft accounts, and so on. Any money that's really easy to get ahold of, not including credit. M2 money is all that plus limited-withdrawal savings, money markets, and less liquid forms which are still basically cash - no credit is included. There are people who argue that money velocity is basically constant, but if anything will dissuade that argument, it's these charts.
This data has historically been interesting, but as you can see, we're still at impossible lows for a recovery which does in fact have some actual apparent traction. So I have to presume that these numbers are now fairly meaningless, given this data:
...which is to say, the banking system is still just sitting on nearly US$2.4TRILLION with a T in reserves, which is hanging out doing... fuck and all? Apparently?
Anybody know what's up with that?
