Underneath the Propaganda, the Economy Is In BAD Shape …

8 06 2015

Joe Hockey recently stated something along the lines that all of us talking up a recession now had egg on our collective faces.  The economy’s doing just fine hey Joe…….  you’re still a millionaire, after all.  Well…  things are not that rosy at all.

There’s an economic indicator called ‘the velocity of money’.  It’s a measure, apparently, of how fast money circulates through the economy, and the faster it goes, the more consumption happens, the faster the economy grows.  And it seems, not all is boding well on that front.

3 years ago, the velocity of money – this all important economic indicator – was lower than during the Great Depression.  And things have gotten even worse since since then …

These charts from http://www.washingtonsblog.com/2015/06/an-important-economic-indicator-money-velocity-crashes-far-worse-than-during-the-great-depression.html.  Now while they apply to the US economy, I expect ours will be just as impacted as theirs……..

Money

Here’s the money velocity right before the Great Depression hit:

Money 1

Here’s the money velocity from the darkest point during the Great Depression:

Money 2

Here’s the money velocity before the 2007-2008 crash started:

Money 4

And here’s the money velocity from the most recent data from 2014:

Money 3

Bottom line: The velocity of money has fallen much farther – and to much lower ultimate levels – than during the Great Depression.

Ouch

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3 responses

8 06 2015
Anthony William O'brien

The 1% do not spend money the way poor people do. The 1% have got all the growth in world income and they are sitting on it,

Poor people do not buy new cars. The destitute do not buy take away coffees. Casual employees do not buy houses.To steal a quote” there is something wrong with the global consumer, sure is they don’t have any fucking money”

The 1% want it all and they will get it. But it will be all of nothing. The great depression will become the “we used to think that was a bad depression”

10 06 2015
Mark

The unfortunate thing about global consumers not having any money is the use of credit cards and the interest on them that easily doubles the cost of a 20% discounted item if not careful. Careful is not – “paying the minimum each month”.

9 07 2015
Global Economic Red Alert | Damn the Matrix

[…] have already published info about the velocity of money.  When an economy is healthy, money circulates fairly rapidly.  I buy something from you, then you […]

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