Illusion of Prosperity: GDP to M2 Ratio: We’re Not in Kansas Anymore

Friday, March 5, 2021

GDP to M2 Ratio: We’re Not in Kansas Anymore

5 comments:

Who Struck John said...: It's all fun and games until someone wants to buy something real.; March 5, 2021 at 6:42 PM
Stagflationary Mark said...: There’s no place like home appreciation.

I'll get you health insurance, my pretty, and your little dog pet insurance too!; March 6, 2021 at 12:55 AM
Anonymous said...: Yellen doesn't see a problem.

GO BIG!; March 6, 2021 at 8:51 AM
Mr Slippery said...: The M2 velocity of money chart looks very much the same. Down big starting in 2008 and off a cliff in 2020. https://fred.stlouisfed.org/series/M2V; March 8, 2021 at 1:31 PM
Stagflationary Mark said...: Mr Slippery,

Not only does the M2 velocity chart look very much the same, but I think it actually IS the same.

I never looked too deeply into how they calculated the velocity (or did and don’t remember), but it makes sense that it would be GDP / M2.

So, I charted GDP/M2 - M2 velocity and it was nothing but a negligible amount of noise hovering around zero.

Good catch! Very enlightening. :); March 8, 2021 at 1:46 PM

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