When You Don’t Spend Any, the Velocity of Money becomes Zero
Edmoney is tracking the allocation and spending of education-related stimulus grants. The map is here. Some states have gotten the funds into circulation better than others. Selected states below (GA was highlighted by them):
- California, 78%
- New Jersey, 63%
- Georgia, 62%
- Indiana, 60%
- Oklahoma, 50%
- Mississippi, 42%
- Massachusetts, 41%
- Michigan, 41%
- Kentucky, 39%
- Pennsylvania, 35%
- Ohio, 29%
- New York, 25% (but NYC 60%)
- Texas, 25%
Have not seen one RA project in Baltimore. In San Fran last week I saw a sign, but zero work – not even a single piece of equipment. I said it before that all teh stimulus would get abosorbed into things like pension shortfalls, so there is no velocity. M3 is collapsing.
M3 and pgl in 2006?
That 2006 post was interesting, becuase at the time the fed discontinued M3, at the time M3 seemed to be signaling a problem on the horizon, which turned out to be the housing bubble. If we move forward to present day M3 growth is collapsing. I know there is a lot of debate on what this means, lagging leading, usless, useful. Not sure yet. But does this drop in M3 mean we are headed for serious trouble?
Chart
http://images.creditwritedowns.com/wp-content/uploads/2010/06/MoneySupplyGrowth.jpg
Forgot to add, my big question is if the fed is really easing monetary policy or not, or is teh fed powerless right now.
Read this strange insider story about a hedge fund operated out of Austria:
http://proposition13.blogspot.com/2010/08/paragon-advertising-back-to-it.html