ability to increase “lift” in the economy is impaired by
1) declining M1 Money Multiplier Ratio and
2) M2 Money Velocity.
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Posted on 07/02/2012 5:29:02 PM PDT by whitedog57
In fluid dynamics, a stall is a reduction in the lift coefficient generated by a foil as angle of attack increases. This occurs when the critical angle of attack of the foil is exceeded.
Is the US economy stalling? Today’s manufacturing report suggests that our “lift” is indeed reducing. We are below a reading of 50.0 which historically has been bad news.
The Federal Reserve faces a dilemma since its ability to increase “lift” in the economy is impaired by 1) declining M1 Money Multiplier Ratio and 2) M2 Money Velocity.
The Fed Funds Target is approaching 0% and we are still approaching stall speed.
While The Fed can expand their near $3 trillion balance sheet (and risk to taxpayers), that will be opposed by Richmond Fed Chairman Jeffrey Lacker.
The yield curve versus 5 years ago shows that it already has fallen around 500 basis points on the short end of the Treasury curve and around 350 basis points for the 10 year. We still have room to go lower (like Japan), but will it do any good?
The Fed’s Five Year Forward Break-even inflation rate is around 2.48%. We need growth in aggregate demand to start seeing hot inflation.
Stated differently, The Fed is having trouble generating economic growth and even inflation beyond 2.50%. While inflation remains a major concern, we still can’t see it in the data.
But that isn’t good news. I feel like a Navy Grumman A6 Intruder pilot who can’t see the SAM (surface-to-air missile) homing in on me.
(Excerpt) Read more at confoundedinterest.wordpress.com ...
they need more hot air !!
The Fed money is sitting in bank vaults. There is only 2 ways to get the people money, drop it from helicoptors or LOWER TAXES.
I keep picturing this famous movie sequence...fast forward to about 4:15, where Chuck realizes his plane has just turned into a lead pipe, twenty miles off the ground, and there’s only one way left to go:
http://www.youtube.com/watch?v=1Cq7hf4ylvY
I have it from a highly placed source that we need more uhhh, stimulus. So they can make some more uhhh, widgets.
Exactly. Just send everyone that filed a return a check for 10K. That'll generate some inflation and at least the money is going to the people without interest.
1) declining M1 Money Multiplier Ratio and
2) M2 Money Velocity.
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YuP
I guess Anthony B. Sanders never goes grocery shopping. I suspect grocery inflation is running at least 5% so far this year. (Got no proof except for a shrinking bank account.)
We’re in a deflationary spiral. Unemployment depresses demand, which fuels unemployment.
Political turmoil in Europe and the mideast should have sent oil to the moon for good; it putters. There’s no worldwide demand.
Welcome to Cloward-Piven, brought to you by Obama.
Cue the World War, and the re-alignment.
Earth to Fed: WHAT GROWTH?
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