Each quarter we take some time to look out at what are the major economic circumstances that will face investment markets over the next few months.
The Velocity of Money – Horowitz & Company
Chairman Bernanke and the rest of the Federal Reserve Board (Fed) have been in a very difficult position over the past two years. Coming off of a deep recession, traditional monetary policy measures haven’t been able to bring the economy back to pre-crisis growth levels. This has forced the central bank into uncharted territory, requiring them to use non-standard methods in an attempt to stimulate the economy. However, what is becoming clear is that most of these tools have only been able to bring temporary relief and the U.S. economy continues to grow at a sub-optimal pace. Part of the problem has been the ongoing aftershocks from the financial crisis of 2007/2008. Over the past three years there has also been an unusual amount of natural and man-made disasters that continue to weigh on economies. Finally, the significance of the global deleveraging trend has been much greater than anticipated.