Sorry for being a noob but why does that chart indicate deflation and not inflation?
Why is inflation so low?
- Thread starter wheaties
- Start date
Sorry for being a noob but why does that chart indicate deflation and not inflation?
In economics it indicates what you want. You got that right. If you change the
monetary base velocity will be lower if money sits at the bank but inflation can be higher.
The numerator in the calculation in the chart xandman posted is M2.
Have a look at it here: http://research.stlouisfed.org/fred2/series/M2SL
Even more astonishing is M1:
http://research.stlouisfed.org/fred2/series/M1SL
Here is the currency component of M1:
http://research.stlouisfed.org/fred2/series/CURRENCY
According to the link above the M1 currency component is "currency in circulation outside the U.S. Treasury and Federal Reserve Banks." So this is cash money in peoples pockets. What is it worth? According to the chart, since 2008 we have seen just the currency component grow by (1200-800)/800 = 50%. This is just cash - it does not include the deposit multiplier effect as described in the fed video.
These charts don't confirm what Maverick said about new money being put into a vault. These numbers make no sense. Am I being paranoid? Missing the obvious?
Have a look at it here: http://research.stlouisfed.org/fred2/series/M2SL
Even more astonishing is M1:
http://research.stlouisfed.org/fred2/series/M1SL
Here is the currency component of M1:
http://research.stlouisfed.org/fred2/series/CURRENCY
According to the link above the M1 currency component is "currency in circulation outside the U.S. Treasury and Federal Reserve Banks." So this is cash money in peoples pockets. What is it worth? According to the chart, since 2008 we have seen just the currency component grow by (1200-800)/800 = 50%. This is just cash - it does not include the deposit multiplier effect as described in the fed video.
These charts don't confirm what Maverick said about new money being put into a vault. These numbers make no sense. Am I being paranoid? Missing the obvious?
Confidence in central banks.