Circulating relative to Sedentary money

Graph #1: Circulating Money as a Percent of Sedentary Money

When the line is going down, circulating money is going down, relative to sedentary money. And sedentary money is going up, relative to circulating.

When the line is going down, money is moving into savings.

People like it when they can save money. So it seems like a good economy when the line is going down. But only as long as it can keep going down. And there's the problem.

The line fell rapidly to the late 1960s, then went flat, and then we had a recession.
The line fell rapidly in the early 1970s, then went flat, and then we had a recession.
The line fell rapidly in the mid 1970s, then went flat, and then we had two recessions.
You could say those recessions were caused by the Fed, fighting the inflation. And I'd say: Sure. But it shows up anyway in the ratio of circulating-to-sedentary. Just like it shows up in yield curve inversion.

So the long-term trend was down, meaning less money was buying things and more was in savings, until the mid 80s. Then it went up a little in the mid-80s, and then the economy was good in the latter 80s.

And it went up a lot in the early 1990s, and then the economy was good in the latter 1990s.

But the line was low again by the year 2000, and then it went even lower, and then we had a "great" recession.

Aint that great?

And yes, the line has been coming up ever since. And when it gets high enough, it'll start to fall, and the economy will be good again for a while.