Forget The Fed: It's About Velocity! |
| December 02, 2015 | December 2015 Bond Updates |
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Although Milton Friedman and Monetarism became less chic as the Reagan-Thatcher era faded, the Fed continues to act as if the money supply is the main lever for managing the economy. Actually, though, the theory is fine. The problem is that policymakers and the financial markets have been turning blind eyes to 25 percent of a key four-factor model: They’re not paying attention to V, Velocity of money. They’d better start soon or we could be in for some serious turbulence. |
| View more at: http://www.forbes.com/sites/marcgerstein/2015/12/01/forget-the-fed-its-about-velocity/ |
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