[quote author="novaseline"]
http://www.cnbc.com/id/34325134
Government 'Out of Bullets'; Consumers in Trouble: Whitney
Primary among her concerns is the lack of credit access for consumers who she said are "getting kicked out of the financial system." She said that will be the prevailing trend in 2010.
Despite being able to borrow at near-zero percent interest, banks are not taking that money and putting it back into the marketplace. The Federal Reserve said Monday that consumer lending dropped 1.7 percent on an annualized basis in October, the ninth straight monthly decline.
With consumer spending making up about 70 percent of gross domestic product, the inability of even credit-worthy consumers being able to be able to borrow could put a severe crimp in future growth.
"What's so frustrating is you have an administration that is arguing such a populist (ideology) and not appreciating all the unintended consequences that the consumer and small businesses have far less credit," Whitney said.
Which is exactly what's happening and why (again) Winex doesn't know what he's talking about.[/quote]
Actually I believe that all you proved is that you need to improve your reading comprehension. I did mention the velocity of money in my original post.
Most people who talk about gold soaring will look at M2 charts like the following:
But what they ignore is that the velocity of money to levels unseen even during the Great Depression:
If you have someone read what I wrote to you, you will find that I am saying that long term we will have a problem with inflation. That belief is supported by observation of numerous programs coming out of the Fed that would have been inconceivable even a year and a half ago.
Granted, credit conditions are still tight. Banks are pulling in credit lines from both consumers and businesses. (I believe that Meridith Whitney said that consumer credit lines would be contracting by $2 trillion over the next 2 years) But at some point in time the credit crunch will end. The velocity of money will improve. And Bernanke (or whoever is Chairman of the Fed at that point in time) will have a massive problem on their hands.
If the economy is this weak with all of the trillions of dollars that Bernanke is throwing from helicopters everywhere, how do you think it will look when he starts trying to retract that money? How much of the money put into the economy can even be retracted? (How do you retract the $1.25 trillion in toxic mortgages that the Fed has purchased?)