What's interesting is that Shadow stats reports that “Basic M1” (Currency plus Checking) jumped to a new 53-year high of 35.0% of the aggregate Money Supply M2."

That implies that the velocity of money is steadily increasing.

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It seems incredulous to me that the pundits are clamoring about a deceleration in the money stock. No money stock figure standing alone is an adequate signpost for monetary policy. And Barnett’s Divisia aggregates and Rothbard-Salerno’s TMS figures show poor correlations for N-gDp. Hunt’s ODL is not a superior metric. M2 is mud pie.

Banks don’t lend deposits. Only deposit holders/owners can spend or invest their funds. The banks can’t use these deposits. Banks create deposits when they lend/invest. And the volume of money (stock) is irrelevant unless it is turning over (flow). Thus, one should use means-of-payment money in their analysis.

Link: George Garvey:

Deposit Velocity and Its Significance (stlouisfed.org)

“Obviously, velocity of total deposits, including time deposits, is considerably lower than that computed for demand deposits alone. The precise difference between the two sets of ratios would depend on the relative share of time deposits in the total as well as on the respective turnover rates of the two types of deposits.”

The rate-of-change in short-term money flows, the proxy for real output increased in March.

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It's stupid to say that money is neutral when an increasing volume and increasing proportion of bank-held savings are impounded within the payment's system.

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It's incontrovertible, contrary to George Selgin, banks don't lend deposits. Deposits are the result of lending/investing. Ergo, all gated deposits are frozen, lost to both consumption and investment. That is the source of secular stagnation, a deceleration in the circuit income and transactions' velocity of funds (as predicted in 1961).

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