3 ms·
> This cannot affect inflation. Increases in money velocity by definition increases inflation risk, this with increased preference to cash and localized liquid
by CyanBird 5y ago
> This cannot affect inflation.
Increases in money velocity by definition increases inflation risk, this with increased preference to cash and localized liquidity as opposed to financial flows shows a potential increase in consumption and therefore money velocity
This alongside Phillips curve suggests an increase in inflationary forces
- rsj_hn 5y ago> Increases in money velocity by definition increases inflation risk OK, but that is just a tautology. What makes you think that caring less about cash versus deposit accounts in a zero rate world is the same thing as, or leads to, increases in money velocity? The last I checked, it is just as easy for me to spend money (and in fact, a bit easier) with one form of cash-equivalent as another, so why would transferring my balance out of a money market fund and into cash affect inflation at all? > This alongside Phillips curve suggests an increase in inflationary forces The phillips curve is notoriously unreliable. If you want to argue that deficit spending which pays people to not work will create a supply shortfall and thus increasing prices, I can get that. But that has nothing to do with these types of portfolio shifts.