Skip to main content

Personal Consumer Expenditure and Velocity

Personal Consumer Expenditure, PCE, should be somewhat reciprocal to CPI. The FED doesn't get it. Its not liquidity its velocity of liquidity that counts for the energy one feels on the street, the optimum felt at home and the per capita GDP.

With fewer customers, a restaurant owner has no choice but to raise prices. With supply chain problems the grocery store raises prices as well.

V x M1 = GDP. Velocity is rarely mentioned, much less understood. The only chart I've seen was from the St Louis Fed. Furthermore, a very small increase in velocity results in a great increase in personal GDP. Look at the numbers.

Choking the PCE to check inflation, is like training a donkey with a 2 by 4. The donkey will only become compliant when spread eagle, unconscious on the ground.

Comments

Post a Comment

Popular posts from this blog

Inflation

Many retail investors buy individual stocks with growing confidence in a narket that has a long run. Many fail to appreciate the way the market reflects inflation. Company revenue consists of inflated number,s as does cost and profit, thus the market reflects true inflation which must now be near 100%.
Post a Comment
Read more

Rick Atkinson

THE FATE OF THE DAY , just released, The war for America QUOTE George Washington. Our conflict is not likely to cease so soon as every good man would wish....Our cause is noble. it is the cause of mankind, and the danger to it springs from ourselves. March 31, 1779
Post a Comment
Read more

Tariffs versus Capital Surplus

"Trump is Completely Wrong on the Trade Deficit." Let Levin, Sowell, and Friedman Explain. In this interview, Melton Friedman claimed that "deficits are not bad. What's not to like about a capital surplus." In his book Arguing with Zombies, Paul Krugman, a Nobel Prize economist, said, "An end to trade deficits? That's not something trade policy can or should do." The surplus profit earned through cheap foreign labor seeks the most profitable place to go. As the safest and most profitable option, that capital surplus lands in the US stock market. What's not to like about a capital surplus? That fondness intensifies with any threat of it going away, but why would tariffs be such a threat? Scott Bassett, US Secretary of the Treasury, on CNBC's Squawk Box, 4/8/25, said, "If we put up a tariff wall, the ultimate goal would be to bring manufacturing and jobs back to the US. In the meantime, we will be collecting substantial tariffs. As I...
Post a Comment
Read more