Money Velocity needs to rise! - Trading Journal (09.05.20)
Chart above is showing the increase in debt weighing on the usage of money. The flow of money is slowing as debt is in the US is rising. This means the economy is likely slowing. A slow economy in the long run will mean less cash to spend down the road. We are in a rabbit hole where money is flowing into debt and not being protective and this is the cost of borrowing. The reason over borrowing is a bad thing is because we are taking what the future holds and using it today. So what happens in the future? The future will require more debt to sustain but essentially have less to go around.
We are feeling this in the real economy as the debt to GDP has widen even with Covid or not. The pressure to kick start the economy is having a lot of trouble as many are still unemployed and many good paying jobs are never to return.
This last chart best describes the reason why debt is so bad. As each generation in America seeks opportunity to earn more than the generation before them the opportunity is dropping. Something to think about as stock markets are near record highs while the real economy is struggling.
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Very true. Most overlook the velocity of money and how it impacts the overall economy.
Most state the money printing is inflationary but, since the Fed is issuing debt, it is actually deflationary. It kills economic progress since a larger portion of the productivity goes to servicing said debt.
This is why cryptocurrency will have to come to the rescue. There simply is not enough money left to flow through the economy.
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