Tuesday, February 14, 2012

Monetary Velocity is STILL Way Too Low

Above are 5 year charts of monetary velocity, for M1, M2 and MZM.

Let's place the current readings into historical context:

M1 has printed lower.  However, it has been in a very chart decline for the last few years.

M2, on the other hand, is at multi-decade lows.

And MZM is at or near multi-decade lows as well.

Simply put, there is a dearth of transactions occurring in the economy right now.  This is very concerning as we need to have money moving in order for economic activity to pick-up in a meaningful way.