Monetary Base Velocity and Interest Rates: 1921 - September 2020

Tracking the velocity and smoothed change in velocity of the broadest measure of the money supply - the Monetary Base. Velocity is defined here as nominal GDP (GNP 1921-1928) divided by the Seasonally-Adjusted St. Louis Adjusted Monetary Base (AMBSL) - this measure has been manually estimated for December 2019 using the percent change in BOGMBASEW to extrapolate the change in AMBSL as AMBSL has been discontinued as of November 2019. In graphs of the period beginning 1921, the average U.S. Treasury Long Bond is spliced to the Ten-Year Treasury at January 1953 with a 5 basis point (.05 yield) differential. The graphs are constructed using the monthly Monetary Base measure with the nominal quarterly GDP measure pinned to each month in the quarter. Units on date axes in the graphs from 1921 to most recent quarter are 36 months. Graphs use the third Quarter 2020 GDP estimate of $21,157.635 billion.

Graph note: Monetary Base Measures AMBSL 1921- November 2019; BOGMBASEW January 2020 - present.