High Inflation and the Dollar's Velocity of Circulation
Inflation Woes: Thank Congress for its out-of-control spending and the Federal Reserve's System of printing money not backed by goods and services
By Dr. Ileana Johnson Paugh -- Bio and Archives--May 22,2022
American Politics, News | Comments | Back To Full Article
A friend had asked me recently about the velocity of circulation of money in an inflationary economy like ours.
Velocity of circulation of money is better understood through the quantity theory of money model.
Our dollar is deemed fiat money because our government said so a long time before people began questioning the out-of-control printing of it. The dollar has not been backed by gold since 1971 during the Nixon administration. The dollar is only worthy because the government says so and we must take its word for it.
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