US money velocity at historic low

St Louis Fed figures show that the rate at which money changes hands is at it slowest since records began in 1959. The velocity of M2 is now 1.568, down from the historic high of 2.135 in mid-1997 - a reduction of 25.56%. The first 3 quarters of 2012 are all below the previous nadir in 1964.

Roughly speaking, for every 4 dollars spent at the end of the last Millennium, Americans are now spending 3.

But the money supply has not grown sufficiently to make up the shortfall (online figures only start from early November 1980, but the pattern is clear):

 

M2, the Fed explains, is a broad measure of money held by households, so in its way it reflects the state of the real or workaday economy.

 

The latest figure for M2 is $10.2 trillion, up from $4.03 trillion at the end of 1997, a year in which GDP was $8.33 trillion. If money velocity had not changed, current GDP would be not $15.78 trillion as it now is, but $21.8 trillion - 38% higher.

 

Quantitative Easing (not included in M2) is not to stimulate that kind of growth, but to avert or mitigate disaster.  So far, according to the November issue of Forbes magazine, $3.3 trillion has been poured into banks and quite a lot from there into the government, just to keep things going, but Mike Whitney of Global Research reports estimates of $4 - 10 trillion more needed. Even then, the cheap cash may be shoring up stocks and bonds, but is doing little to stimulate demand or support those who try to meet it.

 

The much-maligned Federal Reserve is buying time, but the question is whether anyone is doing anything useful during the reprieve. Governments of both parties have spent 30 years encouraging banks to funnel money into homes - largely unproductive and illiquid assets - and the drag of debt has finally slowed demand to a halt.

 

Meantime, productive capacity has been haemorrhaging Eastwards, and the pool of labour skills in the US are in danger of decay. Even if much consumer and real estate debt were forgiven now, it would be a challenge to rebuild and restaff factories; but all that, I think, is what has to happen.

 

INVESTMENT DISCLOSURE: Mostly in cash (and index-linked National Savings Certificates), but now planning to build up some reserves of physical gold via regular saving.

DISCLAIMER: Nothing here should be taken as personal advice, financial or otherwise. No liability is accepted for third-party content.

Reasons to visit Australia 2: the Bunyip

I first read about the Bunyip in Barry Humphries' first autobiography, "More, Please." Humphries costumed himself as one in an early Australian children's TV programme, in which he would recount Aboriginal legends. Part of the get-up was a large proboscis (some say the Bunyip resembles an elephant) and partway through live transmission the nose fell off. Characteristically, the future global entertainer compounded the misfortune by explaining to the watching youngsters, as he re-fixed the appendage, that he had leprosy; transmission was abruptly terminated.

Attempts have been made to explain away the Bunyip's existence, as with other marvellous and miraculous things; even, to date its first mythical appearance (1932).

On the other hand, it may be quite real and have made its way into Aboriginal folk-memory from 50,000 years ago, when the continent was first colonised by humans. When they arrived, the giant wombat or diprotodon roamed the land, a massive creature weighing nearly 8 times as much as the modern American grizzly bear:

(Pik: Wik)
Together with other giant meaty animals, it seems to have disappeared within a few thousand years of the immigrants' arrival. But like the coelocanth, believed 65 million years extinct prior to its rediscovery alive in 1938, there could be some left.

There are two reasons why we have no complete physical evidence of this creature:

1. It is rare, choosing as its habitat remote swamps and waterholes.

2. If you meet one, you will suddenly become rarer than it.

It also helped revive the Australian film industry, thanks to the 1970 movie "The Naked Bunyip" in which a naïf sex researcher conducts appropriate investigations; the maker bypassed censorship by covering the most objectionable images with Bunyip caricatures. Coincidentally, modern legend says the Bunyip (like Barry Humphries) prefers women victims, but "any port in a storm".

Totnes beats off Costa

News just in: Costa has withdrawn its attempt to barge into Totnes against the will of thousands of residents (though not their local councillors). They'd thought they could use legal threats and cosy cooperation with the planners to override objections. Not that they've always taken the trouble to get planning permission before opening another branch. It's been a hard fight by clever, articulate people; most other communities have had to cave in.

Some may take the view of the spectacularly misguided (but he's still young, bless him) Tom Doran in The Independent (such a hackneyed use of the word "embrace", too) that opposing large-scale capitalism is a Leftist thing. If so, please define politically the 41 independent traders who offer coffee there. Liberty for the individual is not at all the same as liberty for large corporations to engulf and devour in their quest for infinite growth.

You'd think the MSM pseudosophisticates who chorus their support for Big MD dream of retiring to Birmingham city centre. Unlike about a million Brummies.

Let's hear it for Poujadism and "the defense of the common man against the elites" - surely a theme close to the hearts of libertarians.

Reasons to visit Australia 1: The Cigarette Snail

(Pic: Wik)

This little beauty is found in coral reefs and shallow waters in the Indian Ocean, but the beer isn't so good there. So come to Australia, where the last recorded fatal attack on a local was in 1935. Worldwide, only 30 deaths in 300 years, so the odds are in your favour.

The "cigarette" monicker is because it's said to poison you so fast you only have time for a smoke. That's a wild exaggeration: actually you have a few hours. And the creeping paralysis doesn't hurt too much - the stinger injects an analgesic together with the venom.

How language changes: "Savile row suit"

From the Duden Anglais Encylopedia of Contemporary Language (2020 Edition):

(In this example, the pronunciation has altered because of the substitution of one homonym by another.)

Savile Row Suit [sævɨl roʊ suːt] (archaic): expensive, handmade gentleman's apparel. Savile Row was one of the famous centres of the London garment trade. The work has since been outsourced to China, India and latterly Vietnam, and the street is now best known for its branches of Costa Coffee, TKMaxx and other consumer chain outlets, plus the largest unemployment benefit office in Manche Nord (formerly SEEDA/EMDI, previously "South-East England" (q.v.)).

Savile Row Suit [sævɨl raʊ suːt] (modern): expensive legal action taken to deny contemporary knowledge of, or indirect involvement in, an entertainer's sexual misdeeds. This phrase gained currency in the aftermath of the October 2012 Newsnight/Panorama controversy (current affairs programmes on the now-defunct British Broadcasting Corporation (see "Sky BEEB")) over the late Sir Jimmy Savile.

Its usage then extended to cover the sexual exploitation of "underage" girls by many popular musicians and film- and TV-programme-makers in the 20th and early 21st centuries. The usage is expected to decline in the near future, as the age of consent has since been lowered to 14 and is scheduled (pending Presidential Assent) to be abolished entirely as per old NCCL recommendations. (The NCCL, now known as Liberty, had sometime included among its officers future Labour Government ministers Patricia Hewitt and Harriet Harman, whose position on these matters may have changed.)

In any case, details of any such alleged past offences are now unpublishable in the EU following the European Privacy Directive of 2019, which incorporates many of the features demanded by the European Privacy Association and chose to go further in the light of scandals involving certain French, Belgian and Italian politicians in the late 2010s.

Among the consequences of that Directive are the "weeding" of newspapers, magazines and other ephemera from libraries (such as the Bodleian) and national collections, to expunge allegations such as the ones that appeared in the scurrilous Spiked magazine in the 1990s concerning a British (see glossary) government minister and a certain North African hotel.

UK more vulnerable to systemic banking tremors than Ireland

That's gross debt, not net debt; but it's the equivalent of balancing two squirming elephants instead of two oranges. Thank you, banks.

Data from: Graham Summers, Phoenix Capital Research.

INVESTMENT DISCLOSURE: Mostly in cash (and index-linked National Savings Certificates), but now planning to build up some reserves of physical gold via regular saving.

DISCLAIMER: Nothing here should be taken as personal advice, financial or otherwise. No liability is accepted for third-party content.

UK more vulnerable to systemic banking tremors than Ireland

That's gross debt, not net debt; but it's the equivalent of balancing two squirming elephants instead of two oranges. Thank you, banks.

Data from: Graham Summers, Phoenix Capital Research.

INVESTMENT DISCLOSURE: Mostly in cash (and index-linked National Savings Certificates), but now planning to build up some reserves of physical gold via regular saving.

DISCLAIMER: Nothing here should be taken as personal advice, financial or otherwise. No liability is accepted for third-party content.