M2V most recent data is from December 2019. It is likely near zero at the present moment.
Some voices are saying that the Fed liquidity and balance sheet expansion is inflationary, but the charts tell a different story.
The velocity of M2 is in complete freefall. We have reached the point where interest suppression is no longer an effective tool for monetary policy. It doesn't matter how low rates go or how much the Fed is willing to lend, people don't want to spend or borrow, and insolvent businesses are going to self-liquidate. People are hoarding cash, and rightfully so.
You can't print your way out of a global demand shock and supply shock.
If you study M2V closely, it tells a story. What you'll see is that the Fed has been in a liquidity trap for the last 20 years. To avoid a big deflation they've pushed rates lower and lower to stimulate growth now and push the problems down the road, but now we're at the end of the road and facing a bigger deflation than we could have ever imagined. There's no more growth to stimulate.
Some voices are saying that the Fed liquidity and balance sheet expansion is inflationary, but the charts tell a different story.
The velocity of M2 is in complete freefall. We have reached the point where interest suppression is no longer an effective tool for monetary policy. It doesn't matter how low rates go or how much the Fed is willing to lend, people don't want to spend or borrow, and insolvent businesses are going to self-liquidate. People are hoarding cash, and rightfully so.
You can't print your way out of a global demand shock and supply shock.
If you study M2V closely, it tells a story. What you'll see is that the Fed has been in a liquidity trap for the last 20 years. To avoid a big deflation they've pushed rates lower and lower to stimulate growth now and push the problems down the road, but now we're at the end of the road and facing a bigger deflation than we could have ever imagined. There's no more growth to stimulate.