Here's one aspect of the economy I wasn't familiar with until seeing Robert Kiyosaki interview Jim a couple of month s ago. In this quick video, from 2015, Jim quickly explains the "velocity of money," and how important it.
In this crisis of the last few months, The Fed has created enormous amounts of money, but the money, for the most part, isn't moving through the everyday economy much at all. These 3 1/2 trillion dollars or so, mostly went into the banking system, the stock market and to a lesser extent, real estate, propping up those markets.
To create the inflation that The Fed is trying desperately to create, according to Jim, we also need more velocity of all this newly created money. While stock traders are staying busy, most everyday people are holding back on a lot of extra spending, and just trying to pay the day to day bills. The tens of millions of people who got laid off, or have taken pay cuts, or are working fewer hours, are struggling to just pay their rent or mortgages. They are not spending near as freely, as far as we can tell now, than they were a year ago. Will the velocity of money pick up? We'll see how this all plays out in the next several months.
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