Thursday, September 3, 2015


Readers of Bizarro Theater know that Americans have not had a money-based economy legally since Congress decreed that Federal Reserve banknotes are legal tender. That happened more than 100 years ago.

Bizarro Theater readers know that were it to exist, money would be coined metal by weight and fineness.  BT readers know that were it to exist, money could exist without either banking or lawgivers such as Congress.

BT readers know that cash is bank credits with bearer negotibility circulating in perpetuity. BT readers know that cash requires banking to exist. Further, BT readers know that cash as legal tender requires both banking, lawgivers and their enforcement agents.

So when anyone talks about the velocity of money, if they weren't muddled in thought by their false beliefs, rightly, they would say velocity of circulation or velocity of the circulating media or something along those lines.

With the legal tender banknote system Americans live by today, velocity of circulation reveals the turnover of negotiable bank credit in the buying and selling of domestically-produced products through time. A rising velocity of circulation shows anyone that Americans are trading new property in the pursuit of profit with greater frequency. Likewise, a falling velocity of circulation shows that Americans are trading new property with less frequency.

In short, an increasing velocity of circulation shows a bettering economy and likely leading to better living for many Americans, if not most. Likewise, a decreasing velocity of circulation shows a worsening economy and life worse off for most Americans.

Hover over the bars for the actual numbers.

For those old enough, when they follow along the chart and reflect on their life, they will see the chart corresponds to reality. In spite of minor recessions here and there, Americans became ever richer after World War 2 through the 1970s. Especially during the 1950s and 1960s, Americans moved to the suburbs, bought houses easily, had two cars in the garage while, had one primary income earner and could easily pay medical bills as well as easily pay for higher education for their college-aged children.

Americans were the envy of the world.

During the late 1970s, American living became increasingly harder. To quell inflation, Fed Chairman Volker oversaw the rising of Fed Funds Rate which pushd the prime interest rate through the roof.

During the Reagan years, and more so during the middle years of his presidency, living improved for many but not all. Yet, optimism prevailed among many.

By the time, the self-professed, kinder and gentler George Bush, Sr., became president, owing to the policies he supported that Congress turned into law, Americans began to see their livelihoods fall. American life became fairly bleak through near to the end of the first term of Bill Clinton.

Around 1994, Americans began to experience a bettering economy. This bettering rose until the peak of the Dot Com bubble, which hit in 1999. After sputtering during the early George Bush, Jr., years, Fed Res chairman Greenspan goosed the economy. Doing so led to the Greenspan-Bernanke Great Inflation, the biggest banking credit bubble in the history of mankind.

The Greenspan-Bernanke Great Inflation combined with reckless mortgage-backed securities peddled by the U.S. Congress itself through its GSE agents, Americans lived through a massive bubble, a false prosperity. That false living came to an end by Q4 2007.

Since Q4 2007, life for Americans has become progressively worse. Much of the damage has been done by the progressive Congress of Harry-Reid and Nancy Pelosi under Barack Obama, a man always who is willing to push more government upon Americans. As well, the Ben Bernanke-Janet Yellen Fed Res policy of near-zero interest rates has wrecked capitalism.

As our lawgivers are weak, mindless men, it's going to take much more pain from a much bigger disaster before smarter men ascend to power who put forth laws and action that restores prosperity to Americans by restoring capitalism, focusing on the protection of the individual and his property (right of ownership) while riding Americans of the failed doctrine of kinder, gentler, crony politics, near-socialism economics.

For those curious as to the technical details of the chart, in the first footnote of the Federal Reserve release titled Money Stock Measures - H.6, someone at the Federal Reserve has defined M1 thus:
M1 consists of (1) currency outside the U.S. Treasury, Federal Reserve Banks, and the vaults of depository institutions; (2) traveler's checks of nonbank issuers; (3) demand deposits at commercial banks (excluding those amounts held by depository institutions, the U.S. government, and foreign banks and official institutions) less cash items in the process of collection and Federal Reserve float; and (4) other checkable deposits (OCDs), consisting of negotiable order of withdrawal (NOW) and automatic transfer service (ATS) accounts at depository institutions, credit union share draft accounts, and demand deposits at thrift institutions. Seasonally adjusted M1 is constructed by summing currency, traveler's checks, demand deposits, and OCDs, each seasonally adjusted separately.

The adjusted M1 is M1 with the traveler's checks removed.

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