Tuesday, 22 October 2013

Velocity of circulation of money.

Striking chart here showing a big decline in velocity since about 2000. (H/t Mike Norman).

The decline since the crunch doubtless reflects the recession. Plus the decline will to some extent reflect the large rise in the monetary base since the crunch: and in particular QE which has channelled money into the pockets of the rich who are not doing much with that money.
As for the steep rise in the 1990s and steep decline in the pre cruch “noughties”, I’m at a loss.

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