– Hey guys, I’m gonna
show you how the velocity of money is declining. At the same time, the supply
of money is increasing. And when you overlay the two
charts I’m about to show you, it really puts in
perspective how close we are to a recession and what
that can mean for you and what you should do about it. I’m getting a little bit tired
of this doom and gloom talk, as I’m being accused of. And I’m one of the most optimistic
people you’ll ever meet, especially when it comes
to the stock market and finding good stocks that
are going to increase in price. But at the same time,
I’m looking at the data, and I’m preparing for things
that I’m starting to see that we are rapidly
approaching a recession, and I’ll show you exactly
why on a couple of charts. If this is your first time here, my name is Peter Leeds, and along with my team, we find the best ways
to make maximum profits from high-quality, low-priced stocks. And as I said, if it’s
your first time here, you should be able to
subscribe to the channel just by clicking on this video
on the bottom right corner, and click on the bell
after that so you get all of the alerts that we put
out right when they come out. So check out these charts. They’re gonna help you a lot, and I’ll tell you what to do about it. Check this out. Now I’ve shown you this chart before. It is provided by the Federal
Reserve Bank of St. Louis. Velocity of Money, the number of times a single dollar is spent as
it passes through the economy. These gray areas are recessions, so you can see here, this is
the most recent recession. And that was quite a while ago but in that time money was
being spent 10.67 times as it passed through the economy. For example, you use a
dollar and you pay for your restaurant meal and the owner of the
restaurant then gets that money and maybe pays off some debts, or buys supplies, pays salaries. So that single dollar is used
again and again and again as it trickles through the economy. And most recently you can see this complete decline in the velocity. I’ve shown you this graph before but this speed of a decline is a problem. The speed of decline
is what’s really gonna kick a lot of small businesses
right in the behind. And it’s gonna be a problem. If this slowly declined that wouldn’t be so much of a big deal, but it has fallen so far, so quickly that it’s just now starting
to show signs of leveling out. So, calming down a little bit. Okay. So you can survive the
decline in velocity of money to a certain degree. It does really imply
that we’re more likely to get into a recession, but there’s other factors to consider. And so when you take a look
at the overall money supply, and you can see this is
that same recession here we’re showing you on the other chart. Look at the supply of money increasing. And if you go back about 15 years you’re looking at a quintupling
of the money supply. Five times more dollars are in existence. And people always say, oh
it’s the printing presses, the printing presses are humming, whatever they aren’t actually printing money. It’s not literally like
you’re seeing on television where they show a bunch
of printing presses just spitting out dollar bills. Money’s not actually being printed. There aren’t printing presses. They do exist, that’s not what I’m saying, money can be printed at
first, but generally, the quantitative easing, all
that money’s not being printed. It’s being loaned
digitally into existence. So it’s a matter of changing
a few numbers on a screen to create a few trillion
dollars here and there. So the problem is, the issue is, if you have the velocity
of money declining by about 55-60% over the last 10-15 years and at the same time you’ve
quintupled the money supply, if you really do the math, overall, each dollar that you have in your hand is being used one tenth as often as it used to be. There’s five times as much money being used half as quickly. So if you go back in time a few years a single dollar was used ten times more frequently than it is now. And now, it’s really slowing down and how quickly it’s slowing down, and the degree to which it’s slowing down, has got an hidden, or
swept under the rug a bit because they’re producing
so much more money. But this is also why I’m saying and I explained ages ago, that this is why quantitative easing did not have any effect. Because they quintupled the money supply and it’s being used
less and less and less. So that you can make a factor
of eighty times more dollars. The money supply is increasing like crazy at the same time that the
velocity is declining at a more monumental rate than that? You could have billions of dollars. Each human being could have a billion dollars. And if you’re not spending it
then what’s the difference? It would be meaningless. And as soon as the
velocity starts to recover, as it absolutely will, probably pretty soon, simply because you’re not going to have a dollar that does not have this kind of velocity. You’re not going to drop
in the fours or the threes almost certainly, unless we get another great depression. But as long as this velocity is declining when it does level out and
start kicking back higher if we get to that point, that is when you’re really
going to feel the affects of inflation, which is coming. You’re gonna see a lot
of inflation coming up and this is just one of the reasons, or one of the ways you
can keep an eye on it and know when it’s really gonna kick in. Keep an eye on the velocity of of money in the Federal reserve
bank of St. Louis chart. And keep an eye on the supply of money which is stupid that you don’t even
need to look at the numbers, you can see the chart,
what’s going on here. This is ridiculous, they’re
breaking the system. They’re taking it all the way to the end. It’s kind of like they’re playing chicken driving their car, they rip the steering wheel off
and they’re playing chicken. The car is careening towards another car and they just close their eyes and hit the gas and just go for it. They’re giving up here. We are now in a situation, regardless of what Dudley or anybody at the FED is gonna tell you. They’re notorious for
being absolutely wrong and for making absolute
brash, bold statements right before an economic
slow down, or collapse, as Janet Yellen has just so thoughtfully done for us very recently. We are probably on the cusp of something that could be pretty ugly, pretty soon and as I told you guys, I’m an optimistic guy but I cannot ignore everything I’m seeing. Velocity of money is falling even faster than it appears to be falling because there’s so much more money out there. This is just setting us up for what’s going to be crazy inflation and it will not be hyperinflation people are telling you it’s
going to be hyperinflation but the difference between
this and situations that engendered hyperinflation is that there weren’t people worried about it and talking about it ahead of time. That’s why there’s not
going to be hyperinflation. Hyperinflation is one of
those things which appears, arises, out of nowhere,
where no one expected it and they weren’t ready for it. If you’re thinking that could happen, some people, not all but some, are sort of worried about it, keeping an eye on it, watching it closely. It’s excessively less likely that we would actually enter into a
scenario of hyperinflation.

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23 thoughts on “Hyper inflation? Recession?”

  1. While I like your videos the idea of hyperinflation depends on what government does during the deflationary period. If they force banks to loan out money they create you will most definitely have a hyperinflation.

  2. I've been watching your videos for a while, but never really posted. I've always wondered what analysts think about the end of days of the financial system. It might seem somewhat depressing but have you ever gave a thought to a scenario or time in the future where the damage that has been done in the last couple of decades would be unsustainable and everything collapses? It seems like the system has been built like a house of cards, and at some point things collapse and turns into total chaos. I'd love to hear your thoughts, do the governments have the means to right the ship or is it just going to be a matter of time before things fall totally apart, years or decades, do we maybe go back to bartering with sacks of potatoes.

  3. Good video Peter. One last chart that could augment your charts is the St. Louis Fed Total Reserve Balances. When that starts decreasing(which it seems to be), velocity of money increases(rising interest rates and tax cuts)and money supply increases(infrastructure spending) the recipe for very high inflation is complete. Then recession…

  4. My good brother Mr. Peter Leeds is honest and right on point. The Chinese have been buying gold for a time now. Why you ask? Great question. Ancer to back there currency. Making them the the standard of world currency backed by gold. Listen to Mr. Leeds. The American petroleum dollar is backed by oil. I hear recently the imf Is considering using the Chinese currency. As the new standard. Go figure. Lady's and gentleman start your economic engine's.

  5. thanks Peter thunderstorms on the horizon, but the weathermen are saying sunshine ahead No need to close the windows LOL

  6. I.e. and p.s. question? Who wins world reserve currency status? Paper dragons? Or gold backed dragons. Anywho food for financial thought. Thanks again Peter for early warning good brother.

  7. There is no Doom and Gloom talk. There is only reality. If people cant handle that, dont water your content down to cater to that demographic. Love your channel, keep it up!

  8. Just to play devil's advocate…question…could this also be because there is far more direct deposits…not hard currency..then those people bill pay online…not hard currency. Could that effect the numbers of a dollar…the amount of times exchanged?

  9. Hi Peter! Small question, lets say this big recession does not happen for another year, what is your outlook on gold and silver before then? Would a bull market still form without a recession?

  10. Im new here. So many videos and so little time. Ive been watching a few today, and i have a headache. I have made money from a settlement and i have it at the bank. What can i do with it the economy will crash again?

  11. peter , how do you think yangaroo stock will hold up during a market down turn ? do you think its better to buy the stock now , or wait till the market down turn happens to get in at a better entry point ?

  12. Thanks for the video. If I understood correctly, you said that velocity is actually worse than the chart shows (given that there has been so much QE). However, isn't it the case that the velocity has decreased so much BECAUSE of all the QE? It is due to the increase in money supply, that the "average dollar" is changing hands fewer times, right? I.e. Similar number of transactions spread across a much higher number of dollars?

  13. People can’t spend what they don’t have. They are loaded up on debt. Wages are not increasing to keep up with inflation. People are somewhat concerned about job stability. The savings rate is at all time lows.

  14. Good video! It is all clear. But i have got one question Peter.
    No one expected the hyper inflation in the 30”s in Germany that is true.
    But is it not that the peopple then just were not able to messure these things? And we can today.
    From Hikmet, I live in Europe but the ECB is just doing the same thing.

  15. How can the velocity of money be recovered if they keeps expanding the money supply? Rising population can't catch up with the rate they expand their money supply.

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