Slower Spending is Avoiding Inflation

Globally, there has been a lot of money printed to fight COVID and stimulate economies. The total US currency in circulation soared to $2.07 trillion by the end of 2020, according to Federal Reserve data. This was 11.6% gain from 2019 and was the biggest one-year percentage increase since 1945, as the nation was coming out of the war and the military-industrial complex took hold. There is about $7 trillion in the base money supply.

The velocity of money is the frequency at which one unit of currency is used to purchase domestically- produced goods and services within a given time period. In other words, it is the number of times one dollar is spent to buy goods and services per unit of time. If the velocity of money is increasing, then more transactions are occurring between individuals in an economy.

SOURCES – One Minute Economics, Alternative Money & Crypto Clips, St Louis Fed
Written by Brian Wang,