Not all economic downturns are triggered by liquidity crises, but all liquidity crises trigger or intensify economic downturns. In modern economic reporting,year-to-year growth in inflation-adjusted money supply (M3) has turned negative only four times before November 2009 going back to 1959 record keeping, and each earlier occurrence signaled either the onset of a major recession or the sharp deterioration in a pre-existing downturn. The previous four times were 1969 (69’-70’ Recession), 1973 (73’-74’ recession), 1980 (81’-82’ recession) and finally 1991 (91’-92’ recession). I've highlighted these negative leading indicators with circles below.  There is a simple economic formula: G = M/P Where G is GDP. M is the Money Supply and P is the inflation. Holding inflation steady, if M gets smaller, that leads to a fall in GDP. As of November 2009, M went negative and history shows us what is next…. CommentsLeave a Reply | FREE SUBSCRIPTION!Receive Emailed Articles as they are Posted. Click Below on RSS Feed!Jason's Thoughts!My goal is to use this format to bring important and timely ideas to the surface on recent events which I feel will affect all of us financially. ArchivesFebruary 2012 Categories |
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