Understanding Money Velocity in Economic Turmoil

Today's episode is somewhat shorter than the norm, since last week's episode was a little longer than the norm. Today, the Inflation Guy notes that M2 money velocity declined very slightly in Q4, and points out a weird - but possibly important - effect that could have the perverse effect of dampening inflation slightly. (To be sure, the Inflation Guy thinks there are other, larger forces at play but this is an interesting one that is worth highlighting in case it continues!)

NOTES

Prior Podcasts from the IG on Velocity:

• Ep. 10: A High-Velocity Tour of Velocity (https://inflationguy.podbean.com/e/ep-10-a-high-velocity-tour-of-velocity/ )
• Ep. 34: Velocity Turns Higher...Whoops! (https://inflationguy.podbean.com/e/velocity-turns-higherwhoops/ )
• Ep. 50: What the Money Velocity Comeback Means for Inflation, and Investors (https://inflationguy.podbean.com/e/ep-50-what-the-money-velocity-comeback-means-for-inflation-and-investors/)
• Ep. 108: Revisiting Velocity - Myths and Reality (https://inflationguy.podbean.com/e/ep-108-revisiting-velocity-myths-and-reality/ )

Very important blog post: “What Makes a Stable Coin Stable?” https://inflationguy.blog/2024/10/31/what-makes-a-stable-coin-stable/

Blog for this month’s CPI: “Inflation Guy’s CPI Summary (December 2024)” (https://inflationguy.blog/2025/01/15/inflation-guys-cpi-summary-december-2024/ )

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