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lquadland10 (< 20)

QE 3

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12

July 24, 2012 – Comments (6) | RELATED TICKERS: GS , JPM , C

Will Ben ease or not. I say not because little knowned fact is China said if we do ease then it is going to enter into a currency war. So if old Ben does then all bets are off and we will enter new newer places we have not been before. Oh which road will we go?

6 Comments – Post Your Own

#1) On July 24, 2012 at 4:03 PM, AvianFlu (34.92) wrote:

Whether announced or not, QE appears to have been happening. I refer you to the following M2 money supply chart provided by the St. Louis Federal Reserve bank: http://research.stlouisfed.org/fred2/series/M2/

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#2) On July 24, 2012 at 4:35 PM, AvianFlu (34.92) wrote:

An even more interesting chart from the St. Louis Fed is the following money velocity chart which I happened to accidentally run across today: http://research.stlouisfed.org/fred2/series/M2V/

 When you consider the massive money printing that has happened over recent years, it has been very surprising to me that inflation (although not good) has not been much worse. This chart explains this. The formula for inflation is money supply times money velocity equals prices, assuming that output stays constant. So if money supply increases and velocity stays constant we will have inflation. If velocity increases and money supply stays constant we will have inflation. But if money supply increases and velocity decreases, they will cancel each other out somewhat. That is what we are currently experiencing. If we ever get to the point where velocity is in the normal range then we will be having bad inflation.

By the way, I notice that we are currently experiencing the lowest velocity since they started keeping records, which was sometime in the mid 1950s. People are holding onto their money!

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#3) On July 25, 2012 at 1:58 AM, awallejr (82.72) wrote:

Whether China engages in a currency war is irrelevant.  In the end if we or Europe don't buy their crap they lose.  Eventually China will realize that their growth lies in encouraging their people to turn to consumption.

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#4) On July 25, 2012 at 10:19 AM, miteycasey (35.10) wrote:

I hope not. I think he's realized American's aren't in a spending mood and the amount of money in the system isn't being used.

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#5) On July 25, 2012 at 10:50 AM, lquadland10 (< 20) wrote:

Thank you everyone. I think we are in a QE 5 but then again I have been wrong before.

 

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#6) On July 25, 2012 at 10:57 AM, mtf00l (43.58) wrote:

The money created is going to the banks who are investing it in there investment vehicles and letting it ride...

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