The fall in money demand also corroborates Dr. Philip George's theory in "The Riddle of Money Finally Solved" ( the ratio of M1 to the sum of 12 months savings ).
People don't understand money and central banking. Banks create deposits when they lend/invest. So, all bank-held savings originate within the system. A decrease in time deposits, dis-saving increases demand deposits dollar for dollar. Demand deposits turn over at a much higher rate than time deposits.
The spike in inflation is textbook. See: “Quantity leads and velocity follows” Cit. Dying of Money -By Jens O. Parson
The FED should discontinue publishing income velocity. Vi can move in the opposite direction as Vt, the transactions' velocity of money (Irving Fisher's truistic metric, not Friedman's).
Divisia Aggregates rates-of-change clearly underweight velocity - just as they did in 1981.
The fall in money demand also corroborates Dr. Philip George's theory in "The Riddle of Money Finally Solved" ( the ratio of M1 to the sum of 12 months savings ).
People don't understand money and central banking. Banks create deposits when they lend/invest. So, all bank-held savings originate within the system. A decrease in time deposits, dis-saving increases demand deposits dollar for dollar. Demand deposits turn over at a much higher rate than time deposits.
The spike in inflation is textbook. See: “Quantity leads and velocity follows” Cit. Dying of Money -By Jens O. Parson
The FED should discontinue publishing income velocity. Vi can move in the opposite direction as Vt, the transactions' velocity of money (Irving Fisher's truistic metric, not Friedman's).
re: "Those moves are consistent with a positive supply shock."
I'd say it's also consistent with a fall in money demand, gated deposits falling relative to transaction's deposits by 18%.
see:
https://www.frbsf.org/economic-research/publications/economic-letter/2023/may/rise-and-fall-of-pandemic-excess-savings/#:~:text=Should%20the%20recent%20pace%20of%20drawdowns%20persist%E2%80%94for%20example%2C,at%20least%20into%20the%20fourth%20quarter%20of%202023.