13-09-2022, 07:31 AM
What you will learn:
Global liquidity is still excessive but retreating: Now that the US stock market is hovering around the official definition of a bear market (declining 20% from its January peak), one might wonder about the role money or excess global liquidity plays in this.
Money velocity is slowly picking up: Part of this is a consequence of simple maths. In a recession GDP falls but money stock does not automatically adjust (nor would you want it to), so that the result is inevitably a decline in velocity.
The more liquidity in the system, the bigger QT is needed for the same effect: The effect of liquidity on asset prices changes over time, too. It has generally become weaker as liquidity becomes more abundant.
https://www.oxfordeconomics.com/resource...k-markets/
Saving rates rise.
Global liquidity is still excessive but retreating: Now that the US stock market is hovering around the official definition of a bear market (declining 20% from its January peak), one might wonder about the role money or excess global liquidity plays in this.
Money velocity is slowly picking up: Part of this is a consequence of simple maths. In a recession GDP falls but money stock does not automatically adjust (nor would you want it to), so that the result is inevitably a decline in velocity.
The more liquidity in the system, the bigger QT is needed for the same effect: The effect of liquidity on asset prices changes over time, too. It has generally become weaker as liquidity becomes more abundant.
https://www.oxfordeconomics.com/resource...k-markets/
Saving rates rise.