re: "if it closely offsets changes in the outside temperature"
William Barnett's #s don't adequately explain velocity. He had a definite problem in Volcker's era.
Since we don't have a valid velocity figure, bank debits to deposit accounts, we must fall back on the ratio of transaction accounts to savings/investment type accounts (gated deposits). Greenspan discontinued the transaction concept of money velocity in Sept. 1996.
The fall in the "demand for money" (inverse of Vt) is historic.
Shadow stats refers to this as: "The most-liquid “Basic M1” (currency plus Demand Deposits) held 118.1% above its Pre-Pandemic Level and is increasing year-to-year, versus the Aggregate M2 Money Supply holding up by 30.0%, but declining year-to-year".
M2/GDP is still too high.
M2/Gross Domestic Product | FRED | St. Louis Fed (stlouisfed.org)
Based on the rate-of-change in our “means-of-payment” money supply, the May #s, there will be no recession this year.
Exceptionally good piece. Especially liked Wage/NGDP ratio.
re: "The drop in the “outside temperature” (v) due to the implications of the pandemic was sudden and deep"
O.K., but the drop in the 1st qtr. of 2020 was already predetermined to be negative (based on required reserves).
re: "if it closely offsets changes in the outside temperature"
William Barnett's #s don't adequately explain velocity. He had a definite problem in Volcker's era.
Since we don't have a valid velocity figure, bank debits to deposit accounts, we must fall back on the ratio of transaction accounts to savings/investment type accounts (gated deposits). Greenspan discontinued the transaction concept of money velocity in Sept. 1996.
The fall in the "demand for money" (inverse of Vt) is historic.
Shadow stats refers to this as: "The most-liquid “Basic M1” (currency plus Demand Deposits) held 118.1% above its Pre-Pandemic Level and is increasing year-to-year, versus the Aggregate M2 Money Supply holding up by 30.0%, but declining year-to-year".
M2/GDP is still too high.
M2/Gross Domestic Product | FRED | St. Louis Fed (stlouisfed.org)
Link: Calafia Beach Pundit: A soft landing thanks to surplus M2 (scottgrannis.blogspot.com)