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+--- Thread: QT: Global liquidity is still excessive but retreating (/Thread-QT-Global-liquidity-is-still-excessive-but-retreating)
QT: Global liquidity is still excessive but retreating - theold - 13-09-2022
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/beware-of-quantitative-tightening-a-little-goes-a-long-way-in-global-stock-markets/
Saving rates rise.