I don't know. If the velocity of money is down to 1, then that seems to me to mean that people are paying their debts and not spending money they don't have. When did that get to be a bad thing? Corporations are hoarding their cash because the economy is so effed up they need to build a cushion. You are a big proponent of the fact that technology and innovation will lead to an age of abundance. I guess I can't wrap my brain around why it's a "good" thing for our government to keep putting our country further and further into debt. We are now at a point where we have to print money just to pay the interest. How can encouraging people to put themselves into debt be a good thing for anyone (other than the banks)? To me, inflation will be a byproduct of this. If less goods are being sold but their is more paper money out there, prices will rise because it will no longer be about supply and demand of the products. Rather it will be about an overabundant supply of the currency. I don't know. I'm with @shortsegments. It makes my head hurt and I'm glad I'm in crypto. lol
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The velocity if money is slowing down basically due to the money being locked in the banking system that cannot be moved. When people understand that easing is really just swaps, then they begin to see what happens. All those deposits are tied up in the banking system and cannot move. Banks are then dealing with reserve instruments that they use to settle each days accounts. This is something that actually produces less money out there, further slowing the economy.
Yes credit card reduction is a good thing. However, loan reduction, overall, is not. Innovation comes from debt funding. If money is a tool of collaboration, then the economy is better served the more that is out there. In our system, which is debt based, that is the only way it gets into the economy. Someone, either individual, government, or company has to take a loan. Obviously the worst of the three is government since they tend to provide a crappy roi on anything they do.
While people complain about debt levels over the last 40 years, and they are huge, the fact is they do not complain about the largest advancement in human history. Look at all there is today compared to 50 years ago. How do you think all of that came about? Where did the money come from?
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I get that. The question is whether much of that advancement would have happened anyway if we had stayed on a gold-backed dollar. Maybe, maybe not. Either way, the point is moot now since we can't go back. In the meantime, it HAS led to the creation of crypto. There is a clearly defined need for an uninflatable asset/form of currency. Regardless of whether inflation is a net positive, as @edicted talks about, or not, the fact that bitcoin has gained the adoption it has world-wide speaks to it's relevance and value. There's a lot to be said for something that just is what it is with transparency and immutability as fundamental properties.
I don't know if it will ever replace anything as a currency but....it seems very likely to become a major leg in the world's financial structure.
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As an aside, the Federal Reserve is a private company and made over $320 BILLION in profits last year IIRC. They are the ones getting paid all the interest from our government. And whether you think they're backed into a corner or not, THEY put themselves there. And we all get to suffer for it. Obviously that is a very simplistic view, but facts are facts. They are in control of our monetary policy and their machinations over the last 50 years have definitely played a large role in why our country is in so much debt. And yet I'm sure they've probably profited in the hundreds of billions every year for at least the last 10 years if not longer. Doesn't that seem like a conflict of interest to you?
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Certainly they did that. The liquidity crisis in the USD is all the Fed's doing. And guess what, they will continue to make the problem worse. In fact, we are seeing on a weekly basis.
Ultimately, the Fed will crash the economy before they realize what is going on. So we know where the source of the problem is, at least on the surface. Deeper down, the real issue is a debt based monetary system which means that default is built it. There is not enough money out there to pay all the debts due to interest which starts ticking the second money is created.
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