Such an antiquated concept. More dollars flow through the hands of private equity than those of consumers. Remember, 80% of all stock is held by 10% of the people. So when you look at securities, assets, and debt transactions, the 'Velocity of Money' concept feels like something out of the 1950s.
Yes indeed the velocity of money is another factor why there's inflation it isn't just too much money in the system. Money can sit in a bank account or inside an investment. The situation were in now is that the velocity of money was high through real estate transactions.
Wouldn't it make more sense to think in terms of the number of transactions rather than the number of times a dollar charges hands? Transactions are concrete, identifiable things, while a circulating dollar is a fantasy.
I agree that thinking of transactions is the correct way to think of things. I used the analogy of a single dollar as I thought it would be easier for people to grasp the concept
I have a question. In MMT people r saying that printing money will boost the economy, but it lead to hyperinflation. So they use tax to increase the demand of currency. Is that true? Does 'tax' increase the currency demand? Could you please answer my questions or make a video about it
Under MMT printing money will boost the economy but if too much money is printed then you will get inflation - or even worse hyperinflation. When the economy reaches it capacity (everyone is employed) then printing more money will just cause inflation. If printing money is a way of putting money into the economy then taxes are a way of taking money out of the economy. What is important is the net difference. Tax on its own doesn't really increase the demand for money. Hope that helps. I do have a separate video on MMT.ua-cam.com/video/lp0NBod3Hsw/v-deo.html
When the deficit goes down we end up with inflation. Biden has spent less money than any president in the last 50 years. Germany went into austerity in the 1930s. so high inflation.
Now...if I use a credit card....and buy a Coke, 1.5% goes to the bank. Then the store owner only has 98.5 cents to pay the employee. Then the employee takes that and buys a card with the 98.5 cents... the card store owner now has 97.0225 cents to pay the employee. Eventually the velocity of money stops and the bank has it all. Let’s ban cash and just use credit cards says the people in charge.
That is only the tip of the problem, in order to compensate for the lack of purchasing power you have to produce more stuff try to sell it or export it or borrow more money from the bank
If we don’t follow economic policy making and banking principles, we can see disaster in our results or even counterfeit results. We can see fires and eventually lose our Freedom’s and rights. The Federal Government cannot continue to bail us out this many times with this expensive of a budget. We need to control our spending, use prudence, and budget accordingly or the country may see what happened to the Weimar Republic with hyper inflation. Uncle Sam cannot give us Free money without consequences but can only reduce our taxes because the monetary price are out of control. Educational Wisdom and Counsel teachings are necessary to develop a healthier Economic System Model. We cannot continue to stimulate the economy unless it is an emergency or war related expense. If we fail to obey monetary laws, we can cost the Federal Government trillions of dollars in war related expenses and even medical expenses because of illness, injuries, and sicknesses that can happen when we make too much money. Jesus is the only way to true redemption. These failing worldly systems point to Adam and Eve’s sin when they disobeyed God and worshipped money and materialism. The cross is the only way as the key to true Freedom, Liberty, and Justice. GDP and Currency is a fallen way to trade. No matter what we do, we will always need God to supply Knowledge, Wisdom, Administrative Counsel, and what the Bible says about Proverbs to have a safer and healthier life. Jesus is all sufficient when the value of the dollar has plummeted. 2 Corinthians 9:8 New King James Version 8 And God is able to make all grace abound toward you, that you, always having all sufficiency in all things, may have an abundance for every good work. Jesus Paid It All Lyrics I hear the Savior say, thy strength indeed is small Child of weakness, watch and pray, find in me thine all in all ‘Cause Jesus paid it all All to him I owe Sin had left a crimson stain, he washed it white as snow Lord, now indeed I find thy power and thine alone Can change the leper’s spots and melt the heart of stone ‘Cause Jesus paid it all All to him I owe My sin had left this crimson stain, he washed it white as snow It’s washed away, all my sin And all my shame And when before the throne I stand in him complete “Jesus died my soul to save” my lips shall still repeat Jesus paid it all All to him I owe (Sin had left a crimson stain, he washed it white as snow) (He washed it white as snow) (O praise the one who paid my debt And raised this life up from the dead) (O praise the one who paid my debt And raised this life up from the dead) (O praise the one who paid my debt And raised this life up from the dead) (O praise the one who paid my debt And raised this life up from the dead) (O praise the one who paid my debt And raised this life up from the dead) Well praise the one who paid my debt and raised this life up from the dead Jesus You are the one The son of god Conqueror of death King of kings The sacrificial lamb (O praise the one who paid my debt And raised this life up from the dead) Well praise the one who paid my debt and raised this life up from the dead Jesus Matthew 19:29 ► New International Version And everyone who has left houses or brothers or sisters or father or mother or wife or children or fields for my sake will receive a hundred times as much and will inherit eternal life. 1 John 2:17 ► New International Version The world and its desires pass away, but whoever does the will of God lives forever Ecclesiastes 5:10 10 Whoever loves money never has enough; whoever loves wealth is never satisfied with their income. This too is meaningless. 1 Timothy 6:17-19 17 Command those who are rich in this present world not to be arrogant nor to put their hope in wealth, which is so uncertain, but to put their hope in God, who richly provides us with everything for our enjoyment. 18 Command them to do good, to be rich in good deeds, and to be generous and willing to share. 19 In this way they will lay up treasure for themselves as a firm foundation for the coming age, so that they may take hold of the life that is truly life.
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Such an antiquated concept. More dollars flow through the hands of private equity than those of consumers. Remember, 80% of all stock is held by 10% of the people. So when you look at securities, assets, and debt transactions, the 'Velocity of Money' concept feels like something out of the 1950s.
Really helpful. I recommend this for all economics beginners
Well explained 👏.
Thank you very much for this it's wonderfully explained 🎉🎉🎉
Yes indeed the velocity of money is another factor why there's inflation it isn't just too much money in the system. Money can sit in a bank account or inside an investment. The situation were in now is that the velocity of money was high through real estate transactions.
Wouldn't it make more sense to think in terms of the number of transactions rather than the number of times a dollar charges hands? Transactions are concrete, identifiable things, while a circulating dollar is a fantasy.
I agree that thinking of transactions is the correct way to think of things. I used the analogy of a single dollar as I thought it would be easier for people to grasp the concept
I have a question. In MMT people r saying that printing money will boost the economy, but it lead to hyperinflation. So they use tax to increase the demand of currency. Is that true? Does 'tax' increase the currency demand? Could you please answer my questions or make a video about it
Under MMT printing money will boost the economy but if too much money is printed then you will get inflation - or even worse hyperinflation. When the economy reaches it capacity (everyone is employed) then printing more money will just cause inflation.
If printing money is a way of putting money into the economy then taxes are a way of taking money out of the economy. What is important is the net difference.
Tax on its own doesn't really increase the demand for money.
Hope that helps. I do have a separate video on MMT.ua-cam.com/video/lp0NBod3Hsw/v-deo.html
MMT is wrong. Taxes are wrong, every popular economist is wrong. Krugman is wrong. They are all making excuses for crashing the USA economy
When the deficit goes down we end up with inflation. Biden has spent less money than any president in the last 50 years. Germany went into austerity in the 1930s. so high inflation.
Does rising velocity threaten to counteract the reduction of money supply in regards to fighting inflation?
Now...if I use a credit card....and buy a Coke, 1.5% goes to the bank. Then the store owner only has 98.5 cents to pay the employee. Then the employee takes that and buys a card with the 98.5 cents... the card store owner now has 97.0225 cents to pay the employee. Eventually the velocity of money stops and the bank has it all. Let’s ban cash and just use credit cards says the people in charge.
That is only the tip of the problem, in order to compensate for the lack of purchasing power you have to produce more stuff try to sell it or export it or borrow more money from the bank
How will this work in the cyber currency
I think it would be true if the price of all items in this example was the same and if no other cost but profit is considered into equation
If we don’t follow economic policy making and banking principles, we can see disaster in our results or even counterfeit results. We can see fires and eventually lose our Freedom’s and rights. The Federal Government cannot continue to bail us out this many times with this expensive of a budget. We need to control our spending, use prudence, and budget accordingly or the country may see what happened to the Weimar Republic with hyper inflation. Uncle Sam cannot give us Free money without consequences but can only reduce our taxes because the monetary price are out of control. Educational Wisdom and Counsel teachings are necessary to develop a healthier Economic System Model. We cannot continue to stimulate the economy unless it is an emergency or war related expense. If we fail to obey monetary laws, we can cost the Federal Government trillions of dollars in war related expenses and even medical expenses because of illness, injuries, and sicknesses that can happen when we make too much money.
Jesus is the only way to true redemption. These failing worldly systems point to Adam and Eve’s sin when they disobeyed God and worshipped money and materialism. The cross is the only way as the key to true Freedom, Liberty, and Justice. GDP and Currency is a fallen way to trade. No matter what we do, we will always need God to supply Knowledge, Wisdom, Administrative Counsel, and what the Bible says about Proverbs to have a safer and healthier life. Jesus is all sufficient when the value of the dollar has plummeted.
2 Corinthians 9:8
New King James Version
8 And God is able to make all grace abound toward you, that you, always having all sufficiency in all things, may have an abundance for every good work.
Jesus Paid It All Lyrics
I hear the Savior say, thy strength indeed is small
Child of weakness, watch and pray, find in me thine all in all
‘Cause Jesus paid it all
All to him I owe
Sin had left a crimson stain, he washed it white as snow
Lord, now indeed I find thy power and thine alone
Can change the leper’s spots and melt the heart of stone
‘Cause Jesus paid it all
All to him I owe
My sin had left this crimson stain, he washed it white as snow
It’s washed away, all my sin
And all my shame
And when before the throne I stand in him complete
“Jesus died my soul to save” my lips shall still repeat
Jesus paid it all
All to him I owe
(Sin had left a crimson stain, he washed it white as snow)
(He washed it white as snow)
(O praise the one who paid my debt
And raised this life up from the dead)
(O praise the one who paid my debt
And raised this life up from the dead)
(O praise the one who paid my debt
And raised this life up from the dead)
(O praise the one who paid my debt
And raised this life up from the dead)
(O praise the one who paid my debt
And raised this life up from the dead)
Well praise the one who paid my debt and raised this life up from the dead
Jesus
You are the one
The son of god
Conqueror of death
King of kings
The sacrificial lamb
(O praise the one who paid my debt
And raised this life up from the dead)
Well praise the one who paid my debt and raised this life up from the dead
Jesus
Matthew 19:29 ►
New International Version
And everyone who has left houses or brothers or sisters or father or mother or wife or children or fields for my sake will receive a hundred times as much and will inherit eternal life.
1 John 2:17 ►
New International Version
The world and its desires pass away, but whoever does the will of God lives forever
Ecclesiastes 5:10
10 Whoever loves money never has enough; whoever loves wealth is never satisfied with their income. This too is meaningless.
1 Timothy 6:17-19
17 Command those who are rich in this present world not to be arrogant nor to put their hope in wealth, which is so uncertain, but to put their hope in God, who richly provides us with everything for our enjoyment.
18 Command them to do good, to be rich in good deeds, and to be generous and willing to share.
19 In this way they will lay up treasure for themselves as a firm foundation for the coming age, so that they may take hold of the life that is truly life.