The Price Elasticity of Demand for Stocks

velocity is declining. In the united states, it's dropped from two 20 to one ten. But in europe, money dons over less than one time per year. Notice that the official figures japan are hovering around a half. When velocity declines, it basically makes monetary policy asymmetric. If the our central bank wants to tighten, that will work. But if they try to ease, monetary policy is largely ineffectual. It becomes ineffectual because of the over indebtedness situation.