0 votes

Cool Graph -- $$$ Multiplier < 1.0 shows Fed about to crash & burn!

Dec. 30, 2008, Market-ticker financial guru Karl Denninger posted a very cool graph showing the plummet of the money multiplier (MULT), in tandem with a concise, comprehensible explanation of how this shows that the Fed's fiat currency is out of control, like a stunt plane in a tailspin at an air show:

"The question now becomes whether Bernanke can overcome not only instinct but also political pressure to do the wrong thing and instead use his intellect - and the math - to do the right thing.

What is the right thing? Paradoxially, it is to withdraw liquidity and by doing so force the bad debt into the open where it does (and must) default."


Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.

I thought the Austrian

I thought the Austrian school had debunked the 'velocity' and 'money multiplier' concepts decades ago. I just finished Rothbard's "Man, Economy, and State", and I'm pretty sure that's what I read.

Austrian school is right

Too bad the Fed is pure Keynesian.

I have studied many philosophers and many cats. The wisdom of cats is infinitely superior.--Hippolyte Taine

That graph sends chills down

That graph sends chills down my spine.