An analysis of MZM Velocity and 10 Year US Bond Yields

I recently discovered (autodidacticly) that MZM velocity correlates well with 10 Year US Bond Yields. To see the analysis go to: Treasuries are a bad deal


Comments

  1. Mark UzickFebruary 28, 2012 at 2:00 AM

    The relationship has broken down because of manipulation (suppression) of treasury yields by the Fed. Negative yields are expected soon; how can the velocity of money go negative?

    http://www.rickackerman.com/2012/02/t-bills-may-offer-boomers-a-%e2%80%98safe%e2%80%99-way-to-lose/

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    1. katchumFebruary 28, 2012 at 8:59 AM

      Good point. Velocity can't go negative, while treasury yields can. So there is no way the correlation can always work. But if treasury yields go negative (like in Germany), that would be completely irrealistic, nobody wants to lose money intentionally.

      But it could be that we get negative interest rates, sure. Marc Faber indicated that before, the fed will make you lose money, if you keep it in the bank.

      The Fed can keep interest rates low, but they can't keep the USD strong for long as deficits always lead to currency devaluation as imports go up and exports go down.

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