Dollar Velocity Down Equals No Inflation

Wondering why all the money that the government is tossing at the economy isn’t producing rampant inflation? The answer is that the velocity of money is slowing down faster than the Fed can pump, meaning people are saving money rather than spending it. A good discussion of this phenomenon can be read at Zero Hedge. The savings rate is at 5% which is a phenomenally fast jump, which goes back to my prior querie: What happens if no one wants to borrow more money? How do we stimulate then?

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