[SeekAndFind]

Well, if money velocity is dropping as the chart you present shows, this tells us that all these QE’s the Fed is doing isn’t really affecting the economy.

It also tells us that THAT is the main reason why despite the FED pumping money, inflation is relatively tame.

There is an explanation as to why Money Growth does not necessarily lead to inflation here (for those interested):

http://www.forbes.com/sites/johntharvey/2011/05/14/money-growth-does-not-cause-inflation/

[trebb]

Well, if money velocity is dropping as the chart you present shows, this tells us that all these QE’s the Fed is doing isn’t really affecting the economy. It also tells us that THAT is the main reason why despite the FED pumping money, inflation is relatively tame. There is an explanation as to why Money Growth does not necessarily lead to inflation here (for those interested):

Does it also show that the economy and the Market aren't really in-sync with each other? Not being an economist, I really don't understand the glues that bind in this area.

[HangnJudge]

the main reason why despite the FED pumping money,
inflation is relatively tame

Also see Liquidity Trap

http://en.wikipedia.org/wiki/Liquidity_trap

A liquidity trap is a situation described in Keynesian economics in which injections of cash into the private banking system by a central bank fail to lower interest rates and hence fail to stimulate economic growth. A liquidity trap is caused when people hoard cash because they expect an adverse event such as deflation, insufficient aggregate demand, or war. Signature characteristics of a liquidity trap are short-term interest rates that are near zero and fluctuations in the monetary base that fail to translate into fluctuations in general price levels

[ScottfromNJ]

“inflation is relatively tame.”

According to the government statistics. But that chocolate shake I bought recently cost me $5.00. Seems not all that QE money is just sitting in the bank.