We have the lowest velocity of money since the 80s. So let's take an educated look in to what this means. Let's apply some basic numbers. Say there is $1000 in the economy like the example I gave above.
With a velocity of 10 the country would look like this
Year 1 -
Transactions - $10,000
GDP - $10,000
Velocity - 10.00
Money Supply - $1,000
Now we go through a major recession and people stop spending their money and velocity drops to 7. What happens?
Year 2 -
Transactions - $7,000
GDP - $7,000
Velocity - 7.00
Money Supply - $1,000
UH OH!!! We are in a depression and lost 30% of our GDP. What can we do?? Well at a velocity of 7 to get back to economic growth, let's say the Govt spends $500 and increases the money supply by 50%.
Year 3 -
Transactions - $10,500
GDP - $10,500
Velocity - 7.00
Money Supply - $1,500
So what did the Govt do in reality?? They jacked the shit out of our money supply to compensate for this lack of velocity.
You're a retard. You don't even know what drives "velocity" do you? Using your own example, assuming government spends/pays a federal worker $1,000.00. They tax $300, the worker's net take home income is $700. The centrally planned economy simply make an assumption that he or she would spend $700 to the next person, and the next person...etc in the economy.....Well that's not how it works in real life because when the consumers are already saturated in debts, they would use most if not all of $700 paying toward debts.
More government spending does not translate to more consumers spending. Velocity is driven by the individual "desire" to spend. And that's not happening right now. You can lead the horse to the water but you can't make him drink. Government spending is a process of transferring of private debts to public debts, ultimately, it's everyone debts
More government spending does not translate to more consumers spending. Velocity is driven by the individual "desire" to spend. And that's not happening right now. You can lead the horse to the water but you can't make him drink. Government spending is a process of transferring of private debts to public debts, ultimately, it's everyone debts
Lol, it's hilarious how you argue against some of the most basic concepts of economics. I simply showed you a graph that shows a large increase in m1 money supply and a graph that shows a large decrease in velocity of money. Simply stating the relationship between the two and why the Govt does what it does.
And no, people on unemployment or food stamps aren't taking most of their checks and paying off debt. They are buying food, paying rent, or paying their cell phone bills. The people who receive tax cuts or tax rebates are more likely the ones who will take the excess money to save or pay off debts.
Take my advice, you should not post something when you do not know what they mean, but it's quite a trend here. Your stupidity has no boundaries.
Keynesian whore is grasping at straw again. On average, low income families spend 40% of their paychecks toward mortgage payments, it's a big chunk. Increase in inflation certainly does not help. Gaz price is 40% more expensive now than 2009. That eats away average Joe paychecks, there is not much money left to spend on anything else.
This means nothing to me. Tell me what I said that was wrong and prove it. Thanks! Otherwise leave me alone and stop stalking me.
What do you mean "low income". Because I do not know of very many low income people that have mortgage payments.
And you are dancing all over the place. I simply said velocity went down so qty of money went up. Now you are talking about gas prices and inflation, and Joe's paychecks. You are a schizophrenic and you can not piece together a cohesive argument because your brain is too scrambled. Take it slow man!! I'm here to help, don't view me as your enemy, view me as your educator. You should stop making comments and just ask questions.
Keynesian economy by the numbers.
US GDP
1970 - $4.2 trillions
2011 - $15.2 trillions
261 % increase.
US Public debts
1970 - $400 billions
2011 - $15.1 trillions
3675% increase
On average, 14% increase in public is equivalent to only 1% increase in GDP. How long can we sustain debt grow economy? The house of card will blow is only a matter of time.
US GDP
1970 - $4.2 trillions
2011 - $15.2 trillions
261 % increase.
US Public debts
1970 - $400 billions
2011 - $15.1 trillions
3675% increase
On average, 14% increase in public is equivalent to only 1% increase in GDP. How long can we sustain debt grow economy? The house of card will blow is only a matter of time.
You are still including intragovernmental debt and you are ignoring the fact that we have much larger trade deficit. Of course you wouldn't understand why any of this matters though.
And for the millionth time what I talk about isn't Keynesian. It is just simply what America does. It is what Reagan did, Bush did, Clinton did, etc, etc. It's how our country works... not some 1930s theory.
It's absolutely humorous how you guys think you know what's better for the American economy than the economists who have run the economy for the past 40 years. Yes, I'm going to listen to schizophrenic Snoop over real economists... lol!!
Debt is debt. They must show as liabilities on the balance sheet. It's basic accounting reporting or GAAP. I support transparency, you support misleading and corruption practices. That's the difference between me and brainwashed sheep like you.
Reagan & Bush were big spenders, on the other hand, Clinton was quite fiscal discipline throughout his presidency. Get your facts straight idiot.
It has worked for 40 yrs does not mean it will last forever. How long do you think the country can sustain a debt growth economy on a 14:1 debt to GDP ratio?
Intragovernmental debt is an asset and a liability to the US Govt. That is a complete wash. It is not real debt, it is an allowance. The Govt doesn't owe $5 trillion to themselves. You do not understand basic accounting so you will not understand this.
Nope, you are equating deficit spending to "big spenders". Clinton had the benefit of a massive technology boom. And what happened after the Clinton surpluses? Immediate recession. That's what happens when the Govt balances the budget.
Your 14:1 debt to GDP ratio is wrong. Regardless, we need debt to increase the amount of money this country has... so in essence if we want to continue to grow we will always need to add on to the national debt. Just basic math their bruh!!
School is in session!! I accept Paypal for tuition fees... but because I do not trust you and you seem like a horrible person, I will not accept any personal checks. Thanks!
Typical swing and miss by a brainwashed sheep. That's not reason why they exclude intragovernmental debt from overall calculation. Intragovernmental debts are being excluded from CBO projection based on the assumption that government can modify the benefits from time to time depend on future revenues. Government can either raising eligible age, raising taxes, reducing benefits or they can do all three to meet its liabilities, worst case scenario, the government can stop reimbursing the benefits altogether. Debt ceiling soap opera in the summer is an example of how beneficiaries could be held hostages by their own government.
Lol Keynesian whore is back to spinning, deficit spending is goooooood. We can just spend forever... 14% increase in debt can only grow the GDP by 1% but it is a good number heh? Talking about failing 1st grade math badly.
When my bitch is getting exposed as a little dumb fuck, next step is trolling. It's getting old son.
Lol, whaaaaaaaaaaaat? This doesn't even make sense. You are hilariously dumb. They are excluded from the debt because it's not real debt. If your left hand gives your right hand a piece of paper saying you owe it money... is that real debt?
This is illogical
Lol, you haven't even said a thing that makes sense yet. I'm still waiting!
