Cool Check On Economic Recovery
Inflation can be a dead issue even if the government pumps boatloads of money into a sagging economy if and only if, the velocity of money is also stagnant. Velocity of money is the frequency with which a dollar is spent for a certain amount of money over a given period of time.
If the velocity of money is at a standoff there is nothing to inflate. Even if a given stock market destroys trillions of dollars as the stock market collapses and misguided government printing money to finance all the politicians ill-conceived paybacks to lobbyist, nothing inflationary will happen until the velocity of money accelerates.
A prevailing theory of economics is that one can get the economy going by spending yourself into a deficit. But, stimulating the economy will not work if it’s modus operandi is in the red obligations. A country or a household cannot spend its way out of debt; in fact, the risk profile begins to take on the appearance of some large Ponzi operation.
The government cannot print money out of thin air in order to solve the velocity of money dilemma. People will not amp up purchases with their money in the marketplace because they are afraid. Alarm makes them become more conservative in their buying habits.
Money is a benchmark of exchange created out of savings. In a barter economy, it would be difficult to exchange unequal units of production without a measure of exchange. Therefore a stable supply of money was created. If the velocity of money stayed the same and the money supply increased, inflation would bring the equation into balance again.
Check out our reviews:
FAP Turbo Review
Forex Megadroid Review
Forex Autopilot Review
The federal government created a debt crisis, and consumer confidence will be low until that red ink deficit is paid off. Yet, even in a deflationary situation, the bottom will eventually be reached. The velocity of money will move along in time and the economy will be set to rights again.
At the same time, the government has greatly inflated the amount of money it generates. When the economy eventually takes off and the velocity of money improves, so inflation will also. As consumer confidence increases and all the extra printed money follows after a set number of services and goods, inflation will surge as a result.
So the big question many have is, when do you see confidence and increase in money velocity taking place in the economy? The answer lies in checking the Wall Street Journal or other financial newspapers for their Consumer Confidence Index published numbers. The Consumer Confidence Index is acclaimed the leader amongst other indexes that belong to a special group of statistics that are known as ‘leading indicators’ and can reveal trends in the economy several weeks before they become apparent by harder objective data.
The other premier economic guides that show change before the economy changes are: Gross Domestic Product (GDP) reports, Consumer Price Index (CPI) reports, the Producer Price Index (PPI), Employment Indicators, Retail Sales Index, the National Association of Purchasing Management Index (NAPM), the Consumer Confidence Index, Curable Goods Order report, Employment Cost Index (ECI) and the Productivity Report which measures checked how much turnout is created by a unit of labor. Presented by Cool Checks
Related Posts
