Oddbean new post about login | logout Money velocity = GDP / Money Supply As the denominator grows it goes to zero.
I thought it was a measure of how much the money is exchanging hands?
It's an obscure metric but that is one interpretation. But as the money supply goes infinite velocity goes to zero and that's where we are now. The Tradfi interpretation is "well there can't be inflation because velocity is going down" which is backwards. This chart shows that for every dollar of GDP we make we print one dollar. GDP is an obscure measurement and so is M1 and M2. I don't think it's possible to measure GDP effectively and I don't think anyone knows the actual money supply.