Under another special circumstance (other than an increase
in velocity of money) transfer payments can result in a net increase in nominal aggregate spending.
This can afford these traders the advantage
of velocity of money allowing them to make money quickly.
That's what allows a standard of living to increase and when that doesn't happen, investments start to slow and you get falling capital expenditure and a
falling velocity of money.
For more
on velocity of money and how to think and invest like a banker, I strongly recommend the book «The Bankers Code» by George Antone.
At the very least, any fear that «the money supply will get too small» by reducing the balance sheet should be calmed if the Fed stops IOER, putting cash once on reserve into the real economy, followed by a
rising velocity of money as the economy expands from interest income generated by raising rates.
This is of interest for FED watchers because BOE Governor Mervyn King has been a trail blazer for creative central bank actions and the FOMC may mimic some of the BOE actions to get a boost to a
low velocity of money situation.
It is one target that has embedded in it both the supply of and the demand for money (i.e. total dollar spending = money supply
x velocity of money).
Economies that exhibit a
higher velocity of money relative to others tend to be further along in the business cycle; thus, should have a higher rate of inflation, all things being constant.
First of all, the concept
of velocity of money can mean very different things depending on the context (i.e macro economic or field specific).
A quick look at the St. Louis Federal Reserve shows that
the velocity of money is in a death spiral.
That is, it could be argued that
the velocity of money increased in order to fund the government transfer payments.
However,
the velocity of money trend has eased because the expansion in the money supply is...
Greetings, The United States: Morgan Stanley is suggesting that slower declines in
the velocity of money are pointing to higher inflation ahead.
«That's part of what causes all of the volatility — if there was a very vibrant system where bitcoin was just getting swapped around like crazy,
the velocity of the money would cause bitcoin's price to stabilize and there would be a much more liquid market.
In the face of numerous Fed attempts to spur growth, one measure of economic activity,
the velocity of money, has continued to fall.
From then on, rather than being solely a function of the money supply it was held that the general price level was determined by the money supply multiplied by
the velocity of money in accordance with the famous Equation of Exchange (M * V = P * Q) **.
Velocity of money fell yet again in the second quarter, based on the most recent estimate of gross domestic product.
Just some examples of the financial system in an awkward state of unease:
Velocity of money has been muted, pension funds have been impaired by burdensome discount rates, insurance companies haven't been able to write business at reasonable levels and savers have been penalized.
Dr. Lacy Hunt: I'm not sure that we will have to invert because the economy is so heavily indebted and
the velocity of money is its lowest since 1949.
These demographics are exacerbating the problems because we have too much of the wrong type of debt and thus
the velocity of money has been falling since 1997.
When
the velocity of money was stable, it was much easier to determine a «fair» price for the rate of interest.
Velocity of money was at its peak.
But what if that decline in
the velocity of money has run its course?
The Fed wants you to spend, take risks, and consume to increase
the velocity of money.
But if confidence continues to grow and translates into true market fundamentals, inflationary pressures will eventually take over as
the velocity of money will finally increase.
The velocity of money measures the rate at which money flows through an economy, in other words, how much money changes hands; it has to do with the amount of economic activity associated with a given money supply.
So the more money they print, the more supply they produce which causes
the velocity of money to go further downhill, provided consumer spending remains constant.
An active policyholder who understands
the velocity of money may find that non direct recognition companies offer a better environment to conduct their transactions from.
This concept is called
the velocity of money.
Earning your full interest and dividend, while a loan is outstanding, is an important part of creating a financial arbitrage and capitalizing on
the velocity of money, both which are key aspects of the infinite banking concept ®.
This an important advantage when considering permanent life insurance strategies such as the infinite banking concept ®, which is based upon a number of concepts such as
the velocity of money and creating financial arbitrage to facilitate other activities such as real estate investing through cash value life insurance.
We believe in
the velocity of money and have found whole life to be a great «home base» for your money when it is not in use, with easy access to keep it moving when the time is ripe.
These high cash value life insurance policies are an asset and can be used as tools for acquiring even more assets, through strategic private banking, where you focus on
the velocity of money.
And when you begin practicing infinite banking with your policy, you truly see how
the velocity of money really works.
By keeping your money moving you benefit from
the velocity of money, since your cash value is still in your policy earning interest.
The high level of debt in our society and the falling
velocity of money should cause investors to consider deflation and investing policies.
In general, life insurance policy cash value can be used to supercharge the life insurance policy through paid up additions AND the cash can later be freely utilized to take advantage of other investments through life insurance policy loans, allowing for maximum financial leverage and
the velocity of money.
Tax favorable growth through dividends is a key aspect of the infinite banking concept ® which incorporates
the velocity of money and the idea that your money should always be moving, earning and growing.
We've also discussed the ability to take policy loans from permanent life policies in order to create financial leverage and maintain
the velocity of your money.
The movement of money (
velocity of money) is needed for a healthy and robust economy.