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Escape Velocity

The luckiest member of the club, yours truly, was recently fortunate enough to witness this mise en scène one early fall day.

"No," he said, raising his arm Caesar-like to still the murmuring plebeians in the gallery. "It is part of my plan."

He had used the driver to carry a creek and reach the right fringe of the 164-yard par three. Choosing his two-ball putter, he navigated the bristly grass to the putting surface but left the ball woefully short, some 30 feet from the hole. The country club crowd groaned. Saving par seemed gone with the wind to the Dixie gentry surrounding the kidney-shaped green.

Surveying the slick pool table from every angle, his cool gaze hidden by Ray-Bans, a wry smile cracked the usual steel of his face. Square in the line of his intended roll laid a crinkly, brown leaf, late of some thirsty dogwood. The smile on his lips belied the click of tumblers locking into place in his calculating brain.

He addressed the dimpled sphere with something akin to insouciance. But the expression was tinged with resignation, cuing the parasol-wielding ladies to cluck and the aristocratic Ashley Wilkeses watching the spectacle to shake their heads in sympathy at our foolish Rhett Butler.

Without a practice stroke, he launched the blade. The ball marched on a straight line to the hole, the dogwood leaf standing athwart history and yelling "Stop!" This was no Titleist poodle, though. The determined Top-Flite tank struck the impediment and veered up a hillock to the devilish location of the hole atop it. With the satisfying rattle of ball in cup, parasols were flung in the air and shouts of "Good show, old boy" echoed back to the stately clubhouse, rattling the bourbon-filled coffee cups at a meeting of the Ladies Auxiliary of the Knights of the Mystic Mango. Even cars that used to skedaddle in fear when their operators saw our hero on the tee box that abuts a city boulevard joined the halleluiah chorus with a torrent of horn blowing.

Our hero doffed his visor with a "my work here is done" flourish and sauntered away to collect his trophy.

This was an up and down for the ages. No, it was actually a down and up. Little did the adoring masses realize that every butcher, baker and candlestick maker among them would soon be traveling the same arc of success. The reason? Our hero merely recognized that MV=PQ. All that was needed was more V, velocity, that is, to find the sweet spot. M, money supply, had been growing, but PQ, price level times quantity of goods and services, had remained anemic. Velocity, the number of times a dollar is spent, hasn't done its part - yet.

If history is any guide, V is about to begin pulling its weight. Here's a chart courtesy of the St. Louis Fed. Shaded areas are U.S. recessions.

What the chart tells us is that velocity typically falls in the early stages of recovery, shooting higher as a "virtuous circle" of growing consumer confidence and generous monetary policy conspire to fuel growth.

What could go wrong? V could continue to fall, facing the "fiscal cliff" that looms in 2013. That could turn our down and up par save into down and down triple bogey.