Velocity & multipliers

[bart]

Herewith, some key charts in both the velocity and multiplier areas. They're hot links so will update every week.

Unfortunately, I've found no way to avoid using more than 2-4 lines per chart. There's just way too much disagreement in economics on how to measure velocity, so rather than eliminate someone's favorite I'm just showing the key or main ones... damned if I do and damned if I don't. For what its worth, my favorite is M3/base - M2/base is workable too.
At least most agree on what velocity is - the varying speed with which money moves through an economy.



The raw values:
http://www.nowandfutures.com/images/velocity_weekly.png



The raw values, long term:
http://www.nowandfutures.com/images/velocity_long_term.png




The raw values, except as an annual change rate:
http://www.nowandfutures.com/images/velocity_weekly52.png




The raw values, except as a 13 week quarterly change rate:
http://www.nowandfutures.com/images/velocity_weekly13.png





Lastly, a look at the credit multiplier for a few countries or areas. The credit multiplier is simply total credit divided by GDP.

http://www.nowandfutures.com/images/credit_multipliers.png

[cjppjc]

Martyn's trying to get this message out there:



Good job Chomsky;)
I wonder what the point is. And if this was to be the future, I don't think It would work as smoothly as a fruit market.

[$#*]

Herewith, some key charts in both the velocity and multiplier areas. They're hot links so will update every week.

Unfortunately, I've found no way to avoid using more than 2-4 lines per chart. There's just way too much disagreement in economics on how to measure velocity, so rather than eliminate someone's favorite I'm just showing the key or main ones... damned if I do and damned if I don't. For what its worth, my favorite is M3/base - M2/base is workable too.
At least most agree on what velocity is - the varying speed with which money moves through an economy.
Thanks bart for the charts. As you know my beef is with the methodology used by the FED to calculate base. Including the Circle Jerk Finance(TM) money in BASE I think is very misleading. This explains the difference between the (M brothers)/BASE indicators and the GDP/Ms indicators.

Thanks for the credit multiplier chart. That puts things things in perspective especially the real magnitude of the Lehman collapse and the Chinese credit expansion race.

[bart]

Thanks bart for the charts. As you know my beef is with the methodology used by the FED to calculate base. Including the Circle Jerk Finance(TM) money in BASE I think is very misleading. This explains the difference between the (M brothers)/BASE indicators and the GDP/Ms indicators.

Thanks for the credit multiplier chart. That puts things things in perspective especially the real magnitude of the Lehman collapse and the Chinese credit expansion race.


I'm not sure I entirely or fully understand your beef with how base is calculated, but I think I have the gist. One of these days I hope to more thoroughly research how base was defined before 1984 - there was a huge change then that might alter your views.

I agree too - the biggest point or take away on the credit multiplier chart is how large the jump in China has been recently.

Second is probably that the EU area is more credit crazy than the US, but since the chart doesn't include that portion of credit called government debt it shouldn't be taken at face value. The US is ahead when government debt is added in.

[xela]

Second is probably that the EU area is more credit crazy than the US, but since the chart doesn't include that portion of credit called government debt it shouldn't be taken at face value. The US is ahead when government debt is added in.<!-- / message --><!-- sig -->

Bart, Euro area on the chart means EU?
If so and time permitting, can you do one with the UK on its own and non euro-currency sate-members excluded but with government debt added?

[bart]

Bart, Euro area on the chart means EU?
If so and time permitting, can you do one with the UK on its own and non euro-currency sate-members excluded but with government debt added?

Yes, Euro are means EU and I just changed the legend to reflect it.

I also just added the UK to the original credit only chart, even though 5 lines is a bit much... but making two charts seems worse in the sense that folk would have to look back & forth to see the relationships between countries/areas.

Government debt wise, I don't track it for all countries and don't even have what I believe are reliable enough data for China and other countries like the EU & UK, so I haven't published that chart. Maybe one day when my back order comes in for round tuits...

[xela]

Thanks Bart; if I may suggest, I'd call it EU-27 instead of Euro-area, that way it's clear all member states are included.

[bart]

Thanks Bart; if I may suggest, I'd call it EU-27 instead of Euro-area, that way it's clear all member states are included.

You're of course correct, but it also adds something else that I should maintain when a new member is added (and will likely forget), and would probably confuse more than a few who don't have a clue how many member states are in the EU - or even that the EU has member states.