Velocity of money
MacroDefinition
How fast each dollar in the money supply changes hands annually. Equals nominal GDP divided by M2. Falls during deleveraging and confidence shocks; rises in inflationary environments.
Has been in a multi-decade decline (from ~2.0 in 1997 to ~1.4 in 2024). The Fed's post-2008 reserve buildup massively expanded M2 without proportional GDP gain — most of the new money sat as bank reserves.
Has been in a multi-decade decline (from ~2.0 in 1997 to ~1.4 in 2024). The Fed's post-2008 reserve buildup massively expanded M2 without proportional GDP gain — most of the new money sat as bank reserves.
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