Velocity Of Money Chart
Velocity Of Money Chart. The velocity of money is the frequency at which one unit of currency is used to purchase domestically- produced goods and services within a given time period. The lower chart shows how lending has contracted dramatically.
There is no question that the investment strategy has been shifting more towards the short-term. Note that the Velocity of Money slows during recessions, and the slowdown can linger for many months. It can be thought of as the rate of turnover in the money supply--that is, the number of times one dollar is used to purchase final goods and services included in GDP.
Thus Velocity of Money= GDP ÷ Money Supply.
It means families, businesses, and the government are not using the cash on hand to buy goods and services as much as they used to.
As one can see, two of the three measures are at an all-time low for the periods depicted: Velocity of Money: The Secret to How the Rich Get Richer and the Poor Get Poorer. Note that the Velocity of Money slows during recessions, and the slowdown can linger for many months. The velocity of money is the frequency at which one unit of currency is used to purchase domestically- produced goods and services within a given time period.
Comments
Post a Comment