There’s no velocity to the money out there. It’s not making its way into the economy. It’s theoretical. Since the money is digital, it is always immediately available to the financial markets at the given rates. The effect takes place if they actually make use of it by extending credit out in the markets.[/quote]
I beg to differ on the point that the money is not making it’s way into the economy. Both the broad money supply and M2 have increased by 10%. While this is much lower than the 100% increase in monetary base, it is not insignificant.
Yes there is a huge potential money supply that has not been released into the economy, but the part that has been released is significant.
It’s like the cow that has eaten 60 pounds of alfalfa and produced a 5-pound cow pie. Sure the cow pie is small with respect to the 60 pounds of alfalfa. But when you step in it, it sure doesn’t seem insignificant, it’s still 5 pounds of shit you have to scrape from your boots.
