David Beckworth Explains . . .

. . . Money Supply, Velocity, Multiplier, resulting GDP and the current Weakness in Nominal Spending.

And, at no extra charge, shows why QE has not worked.

Good stuff.  Here's  a meaty morsel.  But don't settle for a snack when a banquet is available.    Check it out here.

The monetary base is simply the stock of money assets directly created by the Fed.   The money multiplier shows to what extent the monetary base is supporting expansion of  other  more commonly used money assets like checking, saving, and money market accounts.  If the monetary base is not supporting an  expansion of these other money assets it is because there is an elevated demand for the monetary base and vice versa.  The money multiplier, therefore, is an indicator of the demand for the monetary base. Velocity shows how often the more commonly used money assets like checking, saving, and money accounts are used in transactions.  The lower the velocity the less these money assets are being used for spending and vice versa. Velocity, then, is an indicator of the demand for these broader measures of money assets which we call the money supply. 

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