Let’s talk Velocity. The speed at which money moves. Conventional wisdom says that a slowdown in velocity has held inflation back. GDP/M2 has fallen from roughly 2.2 in the 1990s to about 1.1. Think about that: a 50% decline!! I don’t believe it. Companies make payroll, employees pay rents, mortgages, car payments, etc, etc. We’ve invented Zelle, Venmo and PayPal. Do you really think people are living monetary life more slowly? I don’t. Remember, velocity is a mathematical calculation M*V=GDP, or V = GDP/M2

Twitter stinks for conversation, but I will try to explain myself. I feel like Don Quixote. The government has become so big that everything is political. We have split into tribes. Cities can burn while people look you straight in the eye and say “it’s mostly peaceful.” Data can come out proving that vaccines don’t stop the virus from spreading and you get canceled for repeating it. This is not good. So, if I don’t like it from one side, I don’t like it from the other side either. We just keep trying to score political points and no one stops.

I’m incredulous that smart people don’t understand how COVID became political? It’s so completely obvious.

In July 2020, Klaus Schwab (Founder of the World Economic Forum and the Davos meeting of world elites) published a book titled “COVID-19: The Great Reset.” 1/4 He wrote it before we knew much about COVID, but Schwab argued it was the basis for a complete shift in the relationship between government and people. Politicians around the world call it “Building Back Better.” 2/4

This isn’t that hard people.
A market economy needs to move freely in order to process billions of pieces of information. When we locked down, we started destroying that the market knowledge built up over decades. Opening up the economy doesn’t fix that immediately. Then… We borrowed $5 trillion from our kids and grandkids and printed $4 trillion in new money supply. We paid people not to work.
“Demand” soared. “Supply” was constrained. Result: Inflation.
This is not just a problem with shipping and ports. It’s more…

Jerome Powell - “I would be concerned by disorderly conditions in markets or persistent tightening in financial conditions that threatens the achievement of our goals.”

Translation: Rising long-term bond yields could keep the economy from returning to pre-COVID activity levels. Problem: The Federal Reserve controls the money supply. It can shovel money into the economy and drive rates down temporarily and make things appear better. But more money doesn’t fix shutdowns, because lack of money didn’t cause them.

Inflation Is Coming!

Some say: Inflation didn’t rise after 2008-2015 Fed QE, so it won’t rise this time. Here are the problems with that argument.

1) From 2008-2015 regulators hammered the banks, so while the Fed’s balance sheet expanded, M2 did not accelerate. 2) In 2020, we used the banks to push out money, the opposite of the first round of QE. PPP loans were financed through banks and unemployment checks were direct-deposited.
3) The M2 measure of money is up more than 25% in the past 12 months.

When I worked on Capitol Hill in 1995/96, the Oklahoma City Bombing happened. That was when Pennsylvania Avenue in front of the White House was closed to traffic. Senate office Buildings and the Capitol increased security. People were pushed back from their Government. Then 9/11 happened and the Government pushed people back even more. They built an underground visitors center for the Capitol Building. You used to be able to just walk in, but not anymore. Riots and fires near the White House in 2020 pushed back the people even further.

Table 3 of the CDC’s data on deaths between 2/1 and 8/22 2020 says directly that only 6% of the 161,392 reported COVID deaths were listed as COVID-19 alone, just 9,684. All other US deaths had, on average, 2.6 additional conditions. cdc.gov/nchs/nvss/vsrr… What this means is that someone with Alzheimer’s, Sepsis and a Cardiac Arrest was counted in COVID-19 death totals just because they tested positive. Even if they showed no symptoms of COVID or even if it was a “false positive.” 9,684 deaths is 0.16% of “confirmed” COVID cases.

1 - Something to think about. The way we calculate the death rate of the Coronavirus is deaths/confirmed cases. The way we count the death rate from influenza (regular annual flu) is deaths/estimated cases. 2- So far, in the 2019/20 Flu season, the CDC says the US has done 1,073,976 tests for influenza and found 222,552 positive. Deaths due to the flu are estimated at 22,000 to 55,000. If we take the low-end of 22,000 and divide that by confirmed cases, it’s a 9.9% death rate.