Where Does Confidence Lie?

VELOCITY is always the key for as it declines due to people then hoarding money you get DEFLATION. When people are afraid the money will become worthless (paper or debased coinage), they spend it faster before it depreciates and that creates HYPERINFLATION at the other extreme.

Martin Armstrong, Staring into the Abyss

The control lever of velocity is confidence. Does confidence reside in the public -those that issue the money and debt, or private sector? Velocity, the speed at which people spend money before it depreciates, tends to increase as confidence in the public sector erodes.

The location and direction of confidence, or capital flows between the public and private sector, is ilustrated by long-term high-grade corporates to government bonds ratio trend.

Confidence is shift from the public to private sector. This will drive capital flows in ways not expected by the investment public.