The Velocity Of Money In The U.S. Falls To An All-Time Record Low

When an economy is healthy, there is lots of buying and selling and money tends to move around quite rapidly. Unfortunately, the U.S. economy is the exact opposite of that right now. In fact, as I will document below, the velocity of M2 has fallen to an all-time record low.

This is a very powerful indicator that we have entered a deflationary era, and the Federal Reserve has been attempting to combat this by absolutely flooding the financial system with more money. This has created some absolutely massive financial bubbles, but it has not fixed what is fundamentally wrong with our economy. On a very basic level, the amount of economic activity that we are witnessing is not anywhere near where it should be and the flow of money through our economy is very stagnant.

They can try to mask our problems with happy talk for as long as they want, but in the end it will be clearly evident that none of the long-term trends that are destroying our economy have been addressed.

www.activistpost.com...

I was listening to a couple of guys from Australia earlier today after a round of golf.. They were talking about their currency and the US dollar... Alot of doom and gloom and what they were trying to do with their money.. Then I came across this article about the flow of money in the USA, "recovery"...
Basically the article goes on to say when there is economic activity, there is money changing hands. As the title says we are at some measurable low point in the USA economy. We have probably all heard now about the folks not counted as part of "the labor force"... Icing on a cow paddy ? Government bureaucrats keeping the "unemployment rate" artificially low ? Once upon a time those who were stripped and sent to the gas chambers were told they were going for a shower or so I have been told...
www.activistpost.com...

The notion that the global economy is in recovery and that the United States has exited the recession of 2008/2009 is a facade.

Michael Snyder at the Economic Collapse Blog and Jim Quinn of The Burning Platform recently noted that despite the purported success of government cash infusions, America’s death rattle is growing louder as household retail brands are being absolutely pummeled by a lack of consumer spending.

Retail store results for the 1st quarter of 2014 have been rolling in over the last week. It seems the hideous government reported retail sales results over the last six months are being confirmed by the dying bricks and mortar mega-chains. In case you missed the corporate mainstream media not reporting the facts and doing their usual positive spin, here are the absolutely dreadful headlines:

Wal-Mart Profit Plunges By $220 Million as US Store Traffic Declines by 1.4%

Target Profit Plunges by $80 Million, 16% Lower Than 2013, as Store Traffic Declines by 2.3%

Sears Loses $358 Million in First Quarter as Comparable Store Sales at Sears Plunge by 7.8% and Sales at Kmart Plunge by 5.1%

JC Penney Thrilled With Loss of Only $358 Million For the Quarter

Kohl’s Operating Income Plunges by 17% as Comparable Sales Decline by 3.4%

Costco Profit Declines by $84 Million as Comp Store Sales Only Increase by 2%

See article for the complete list..

In closing let me just say from my associates and local nationals I have listened to..... I really can not say anyone is feeling good about the world economies and what many think will happen over the next few years...

For those just waking up on the sunny side of the world hope this is not the first thing you read today... I personally am at a loss on what to do to protect my stateside retirement funds other than pull everything out and pay Uncle Sugar 35% or more on my retirement savings. However being overseas there is much talk about the local money being over valued too.. So either way we may be in for a ruff time between now and 2016...? Supposedly while everyone has been watching the price of gold fall there may be something in the works with silver.. Caravan to Midnight had two guys that were basically saying the fat lady is in the last verse of her song so get ready to bend over and grab your ankles for it ain't gonna be pretty... Man oh man I really hope they are wrong for everyone's sake.

Buy copper that seems to be always going up.

Or food you can always eat it

I have been lying on the edge in the water breathing through a hollow stick in my mouth since 2004.

Nothing will meaningfully change here until something very fundamental changes here, it probably won't do anything but more of the same considering so many believe there is some kind of economic recovery going on that isn't.

The only money you cannot have taken from you via your agreeing to having your wealth confiscated is the money that's in your hand, in dealing with banks and investment firms you agree to having it confiscated, it just doesn't say that so directly in that contract you signed.

Cut costs, downsize and take all of your wealth into your direct possession, maybe arm yourself to keep it from being taken if you feel the need to.

40 acres and a mule.

The whole point of quantitative easing is to lube up the system and increase the velocity of the money supply, and for last year or so they've been carrying out the most extreme quantitative easing scheme in history. The fact that the velocity of the money supply can be at an all time low while quantitative easing is at an all time high seems very telling of the situation.

EDIT: here's a video which explains it perfectly:

a reply to: Indigent

Thanks for the reply... Food I can not run out of unless global weather hits the farm in a bad way. Buying metals or anything that one feels could be a barter item is always an option..

Just for talking points..... if you had 1 million bucks that was making you money in diversified investment funds would you take it all and buy copper plus have to pay 35% tax on those funds before the first copper penny was ever purchased? If you want to sell your copper and if all the paper money is worth the price of paper and nothing more we might have a problem on trading a few pennies for a bushel of wheat or corn... dunno just asking ? Russia collapsed and their currency went into the tank but they have turned it around (somewhat) to a much better situation than they had going a few years ago...

Even the Chinese economy has several weak indicators as does most of the world economies... Just seems like everywhere you look things are not grand.. Unless you are talking grand theft by some of the worlds governments and their tax schemes. Anyway, hopefully, someone will come along and drop a few words of wisdom..

a reply to: 727Sky

"I personally am at a loss on what to do to protect my stateside retirement funds other than pull everything out and pay Uncle Sugar 35% or more on my retirement savings. However being overseas there is much talk about the local money being over valued too.. So either way we may be in for a ruff time between now and 2016...? Supposedly while everyone has been watching the price of gold fall there may be something in the works with silver.. Caravan to Midnight had two guys that were basically saying the fat lady is in the last verse of her song so get ready to bend over and grab your ankles for it ain't gonna be pretty... Man oh man I really hope they are wrong for everyone's sake. - See more at: www.abovetopsecret.com...
"

You can control you IRA with a LLC dedicated to your retirement holdings (assets, real-estate, etc.)
yes you can discard those 'certified' 'Custodial Account' s by regulated Financial Dealers and be your own retirement fund manager.. it will cost near $300+ to set up a retirement LLC


? Something starting with Silver ? !

look at this article: news.coinupdate.com...

this is a Treasury ploy to get a surge in revenues by producing ever more 'silver Eagles' sold at spot + mark-up $$$

~ I say to be very careful in jumping onto this bandwagon.. the silver products may be just as fraudulent as the Naked Paper Shorts issued at the PM Futures, COMEX, Market-Maker Authorized PM Dealers certified by the US Mint~



Jim Willey, Mr Rickards & a group of others are in unison that the USD reset/ collapse is ready to happen as close as tomorrow but very, very likely before 2016


I am taking advantage of the recent discounts of Patriot Foods packages of storable/ dehydrated food & fruits
I am on track to have a deep enough well completed by this winter and to be kept 'secret' from the local gov't

just a few trends, actions I am doing...

oh and SD retails lead ammo for buying online in many states....good barter stuff

a reply to: 727Sky

S&F!

So let me get this straight ... You have your retirement funds invested with your local state government ... and that state government has those funds invested in the stock market in big corporate monopolies that provide everything under a million other brand names ... and you're wondering about the stagnation of money flow!

A healthy economy isn't all about flow of money ... its about COMPETITION ... that drives the prices DOWN!

The USA clearly no longer has a FREE MARKET ECONOMY ... and has a fascist state instead!

Pardon my ignorance, I have the most basic understanding of economics, but I have to ask the following infantile question.

My understanding of inflation is that when the amount of our fiat money is increased, it's buying power is reduced. Like the value of a dollar is redistributed to the higher volume of currency in use. So how did quantitative easing, the pumping of more money into the system create deflation?

My ignorant question, "Isn't deflation the opposite of inflation?" I would think that deflation is less money in circulation, with a higher buying power.

Once again, sorry for asking a dumb question and thanks for anyone who might entertain an answer for me.

I discussed the ongoing collapse here... www.abovetopsecret.com...

Summer is usually a period when silver/gold goes down, and I'm waiting til I can buy for $20/oz before I and a friend purchase more.

Everyone should remember the FED is planning on increasing the interest rates in October. We all know rates are at 0% and you can bet that any increase will spook the market, if not create a mini-crash. The current status of the US economy is fragile at best.

a reply to: MichiganSwampBuck

So how did quantitative easing, the pumping of more money into the system create deflation?

That is the trillion dollar question... "experts" led everyone to believe that injecting a huge amount of money into the economy should have solved the problem, but it's actually achieved the exact opposite of what they said, assuming the OP's source is factual.

originally posted by: MichiganSwampBuck
Pardon my ignorance, I have the most basic understanding of economics, but I have to ask the following infantile question.

My understanding of inflation is that when the amount of our fiat money is increased, it's buying power is reduced. Like the value of a dollar is redistributed to the higher volume of currency in use. So how did quantitative easing, the pumping of more money into the system create deflation?

My ignorant question, "Isn't deflation the opposite of inflation?" I would think that deflation is less money in circulation, with a higher buying power.

Once again, sorry for asking a dumb question and thanks for anyone who might entertain an answer for me.

I myself haven't experienced any deflation whatsoever. The easiest way to see inflation on the horizon is the cost of fuel heading up. Everything in the country is delivered with fuel driven vehicles. Since the current POTUS has taken office fuel prices have doubled. Now with new regulations on coal and other energy producers for a phony climate change agenda all energy cost are head way up.

Just google food inflation, housing inflation. It's not looking good, and is only getting worse.

There are no dumb questions, the only dumb question is the one that isn't asked.

a reply to: DietJoke

So let me get this straight ... You have your retirement funds invested with your local state government - See more at: www.abovetopsecret.com...

Auhhh No.. I worked for a real company which matched a small percentage of whatever I placed into a retirement fund..Plus a 401K that I tried to stuff before retirement.... After I retired I went with a financial planner and personal friend who works for one of the bigger bank chains. (Tennis and golfing buddy). I am invested very conservatively and I take money out every month yet the amount on paper continues to grow. Very satisfied with the performance over these last 10 years.. My concern is if the dollar crashes or loses more value so that in the states it takes $4 just for a gallon of milk..Oops almost there bad example... anyway say you go to the grocery store and spend $200 and walk out with a less than full basket... Hummm..... maybe you get my drift..? There are homes in this part of the world that once sold for several million that can now be purchased for 50% on the dollar... I sold my house in the states and lost almost 50% after being on the market for almost two years... On my old street one house that was listed for $450,000 sold for $225,000.. Isolated yes but there were several examples of that kind of stuff and losses..

Houston homes are selling for more than the asking price if you are in the right section of town... Because many business are moving to Texas to get away from their prior states taxes... Houston traffic has always been bad, but bad is not the word for it now....

The International Exchange rate for the dollar has been holding steady or even improving in some areas... Is that because all the economies are tanking or is it because much of the doom and gloom we hear is just to push a product...

I wonder if the USA has any gold to speak of ? Germany wanted theirs back...auh transportation and security problems on our end so it will be a while before we can give them back their gold....yet when the Ukraine mess started supposedly 30 tons was taken over night and flown out to ??? many many things to ponder.. I don't lose sleep over it but I really would like to have a crystal ball that worked.. Don't we all ?
Just thoughts with unfortunately little answers from this key board.

a reply to: MarlinGrace

Right.
I think its important to realize the unique situation the US is in. The Federal Reserve and its policies have put the economy in a lose-lose situation. Is there anything propping up the dollar besides oil? It is no longer backed by gold (There is plenty of suspicion the US doesn't even own any gold, hence the disallowed FED audit). There is no way we can pay off our debt... Its pretty damn scary and this isnt doom & gloom, this is the situation we've been put in. We dont know the way out, we just know its going to get much worse before we see any hint of a rainbow. The uber-rich/elite are sucking the well dry and the government is complicit. They have chosen the winners and losers, revealing the fact we no longer live in a capitalist economy.

a reply to: 727Sky

Hey whats better lose 30 % now or 100 if money came to worth nothing like has happened in many places through history. It all falls to how sure it will be there is going to be a collapse, stable commodities is what i would invest, they are always needed, gold is inflated and not too useful but if you want electricity in your building you have to pay the copper at the price the supplier sells it.

Also im poor and there must be a reason for it so don't pay much attention to my advice.

If i had a few millions i would diversify into stable commodities and keep cash in US and really really stable countries as Switzerland.

originally posted by: 727Sky
a reply to: DietJoke

So let me get this straight ... You have your retirement funds invested with your local state government - See more at: www.abovetopsecret.com...

Houston homes are selling for more than the asking price if you are in the right section of town... Because many business are moving to Texas to get away from their prior states taxes... Houston traffic has always been bad, but bad is not the word for it now....

Same with Austin! Its definitely a sellers market, but Austin has been that way for years. We are ranked 4th for bad traffic in the US. CA residents keep moving here, hopefully leaving their bankrupting policies at the border (wishful thinking).
Forbes-Worst traffic 2014

originally posted by: six67seven
a reply to: MarlinGrace

Right.
I think its important to realize the unique situation the US is in. The Federal Reserve and its policies have put the economy in a lose-lose situation. Is there anything propping up the dollar besides oil? It is no longer backed by gold (There is plenty of suspicion the US doesn't even own any gold, hence the disallowed FED audit). There is no way we can pay off our debt... Its pretty damn scary and this isnt doom & gloom, this is the situation we've been put in. We dont know the way out, we just know its going to get much worse before we see any hint of a rainbow. The uber-rich/elite are sucking the well dry and the government is complicit. They have chosen the winners and losers, revealing the fact we no longer live in a capitalist economy.

I have yet to find anyone who thinks we can pay the debt off. It only adds up to about 50K per person, man, woman, and child in the US. I find it interesting that everyone agrees there is a crash imminent, the debt will never be paid off, but few are preparing. My own mother keeps her head in the sand despite what I tell her. You are right about sucking the well dry, watch the flow of money you will know then when the crash is on your doorstep. Whatever you by today will be at a discount later, inflation will come, and in the beginning food and water will be king. Medicine will be queen.

a reply to: MarlinGrace

Yuuuuup. The ever-present "cant happen in the US" mentality. Couple that with very limited disposable cash for the 99% and it becomes easy to see why few can prepare.

If we can get passed the FED raising interest rates without another 2008-type financial crisis, then we quite possibly can get through the next couple of decades. That is just a sticky situation because its the first time in history rates have been set to 0% with a need to then raise them. Who knows how the markets will react because we KNOW the banks have taken huge advantage of the rates, and are notoriously short-sighted... are we supposed to think they've prepared for the rate-hike in October?... no, it was just a free-for-all for the last 7 yrs!

Well, its been a free-for-all for decades but whatever...

a reply to: MarlinGrace

I myself haven't experienced any deflation whatsoever. The easiest way to see inflation on the horizon is the cost of fuel heading up.

Actually that is a very good point. Just because the velocity of the money supply is low does not mean deflation will occur. Like you said, price inflation seems to be occurring, and has been occurring for a long time. The situation is a combination of inflation (due to quantitative easing) and a low velocity (for reasons that are less clear), which is quite a strange combination, because according to experts, inflating the money supply should help create more liquidity and increase the velocity of the money supply. The situation the US is facing seems to be a very unexpected one.

EDIT: it seems perhaps the best term to describe the current state of the US economy is "stagflation" (a combo of inflation and low levels of economic growth):

The term stagflation was first coined during a period of inflation and unemployment in the United Kingdom. The United Kingdom experienced an outbreak of inflation in the 1960s and 1970s. As early as 17 November 1965, Iain Macleod, the spokesman on economic issues for the United Kingdom’s Conservative Party, warned of the gravity of the UK economic situation in the House of Commons: "We now have the worst of both worlds—not just inflation on the one side or stagnation on the other, but both of them together. We have a sort of “stagflation” situation. And history, in modern terms, is indeed being made."

a reply to: 727Sky

Machiavellian principle: Export more than you import and you (your country) gets richer. Import more than you export and you get poorer.

Simple and to the point. Since manufacturing has left the country (fled? escaped? stampeded?) due to many factors, non-the least of which is the negative business atmosphere promoted by the left (corporations are evil!! (ignore the fact they provide jobs)) we have little to export, and we buy products made in China like they were catnip and we are cats.

Until we can get manufacturing back in the US and can actually export value-added products our economy will continue to suck. The only bright spot is Natural Gas which we should begin exporting within a couple/few years.

In the 60s the US manufactured 25% of the worlds products. Today we are somewhere around 5%. That pretty much tells you all you need to know about the condition of our economy. Instead we have uneducated, unmotivated people demanding $15/hr from fast food jobs. lol

a reply to: ChaoticOrder

the money being printed is being hogged by those that already had gobs of it. The rich people have better access to financial info thru their accountants, hedge fund managers and such. They KNOW the economy is headed ever worse, THAT IS WHY they are hoarding it.

if they thought that releasing the piles of money would fix things, they would. But EVERYONE knows worse days lay ahead and that is why everyone is trying to hoard all the money they can.

Plus, the govt really knew the result, and they have a plan to impoverish us all. Or else they would have sent us all a check in the mail. Like they didnt know the rich would hoard it instead of circulate it, yeah right