|
. . . is part of the money supply. It's not in continuous circulation but is part of M2 and M3. (Even though they don't report M3 anymore.)
And, in some cases, the fractional reserve is in circulation but is intentionally pinched so the velocity is kept down. The reserve is then accelerated through lending which increases the V.
It's impossible to have a higher M unless there is MORE MONEY IN THE SYSTEM. The money in the reserve already counts as printed. Not M1, but in circulation. So, it's not pretending a higher V. It is a higher V. The only thing that allows a system to grow without constant inflation at equal level to the growth, is the ability to use the supply more efficiently. That's the whole history of U.S. capitalism.
And lastly, (i'm out after this), my argument is NOT FALLACIOUS. It is rooted in, and supported by 100 years of data in U.S. economics.
I'm not going to go into a full econometric modeling dissertation here, but the video is based upon flawed theory and is a two dimenstional concept. There has NEVER been an economic model that predicted anything of value with only two dimensions applied. The Professor
|