low money velocity indicates deflation coming:
Harry S. Dent 2013:
. every 60 to 80 years, Inflation becomes deflation.
[money velocity has recently fallen hard]
The last time we saw money velocity drop like a rock
was between 1919 and 1929.
It was during the three years (1930 ..1933)
in which money velocity went negative
that many market bubbles catastrophically popped;
and debt deleveraged at breakneck speeds…
creating deflation, not inflation,
even with record low interest rates
and Fed stimulus to fight the great Depression.
see recent money velocity:
. velocity of M1 supply was in a bubble that has now popped,
still quite a bit higher than the 1960's;
Velocity of MZM and M2 is well below the 1960's.
M1 (a measure of the money supply):
. the most liquid components of the money supply:
cash and assets that can quickly be converted to currency.
M2 = M1 + near money:
. near money includes savings deposits, money market mutual funds
which can be quickly converted into cash or checking deposits.
MZM (Money Zero Maturity):
. what is immediately convertable to cash.