Friday, May 06, 2011

MONEY VELOCITY IN REVERSE  First DECREASE in MOney Base in over 4 months....this just happened to coincide with near historic price burst in silver, oil and other commodities bid up with FED money and specualtion and add in some HORDING....I don't see how recxent action can be seen as healthy and the drop in 10 year yields from over 3.7% to just above 3.1% over this same period is not a sign of strength but of a large mass of money fleeing other things in fear.

The reporting continues to go on at the HAIR CHANNEL for financial BS, and all the ghouls that show up keep chirping about US economic strength and a NEW GEAR of expansion......not much being reported on the claims 4 week moving avg above 430K...INCONSISTANT with expansion and job growth.

Shaded areas are economic contraction (Recessions) and in each case, though with some it is slight, you get a CONTRACTION IN THE VELOCITY OF MONEY (how fast it changes hands in the economy).....I can say with some ease of observation the current SLOWING in velocity is unprecedented.

Definition  "Rate at which money circulates, changes hands, or turns over in an economy in a given period. Higher velocity means the same quantity of money is used for a greater number of transactions and is related to the demand for money. It is measured as the ratio of GNP to the given stock of money. Also called velocity of circulation."

KEEP IN MIND the HISTORIC FED and GOV intervention during this crisis, and the growth in the FED balance sheet from $800B to $2.5 TRILLION and the MULTI TRILLION $ deficits in curred by the govt for stimulus and bailouts......can you say LESS BANG FOR THE BUCK?

All the while, on the HAIR CHANNEL we keep getting reports of rising corporate profitability and earnings!!?? How is it thatbanks have been able for the most part to decrease their loan loss reserves and show mortgage backed paper at or near FACE VALUE when the REAL DEFLATION is in full swing at a home near you? can you spell FRAUD?

The change in direction in silver and oil market (and other commodities) has been nothing short of dramatic.....and at this time a full explanation cannot be given. WAS it just WILD SPECULATION that finally BURST? bringing about a COLLAPSE In pricing?

I can tell you this, wild speculation as avg Joe is on sidelines in the stock market with HISTORIC price rise from the lows of 2009....does not seem consistant with the real world economic data....I see the stock market as VERY DANGEROUS and just as commodity longs recently found out, can turn on a dime ....


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