Money Turnover Slows, Stuck in a Liquidity Trap!
Velocity of Money: What is it good for?
Savers are hurt by low interest rates. The search for yield! You have heard this. Higher yield means higher risk. But what if you can't afford the risk and volatility? You sit tight. No turnover of money. Investment opportunities do not provide the expected returns necessary to assume the additional risk. That is the velocity of money and with out a higher turnover and transfers of cash, the money sits and you are stuck in a Liquidity Trap. No amount of additional money printing and easing will get you out of this hotel.
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