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Is Velocity Stifling Inflation Amid Record Growth of Money Supply

Line chart showing M2 Money Stock in teal and Velocity of M2 Money Stock in green. Chart subtitle: M2 continues to grow while money velocity dips. Chart description: Left Y-axis shows $ in billions, ranging from 0-$20,000. Right Y-axis shows Velocity from 0.0-2.5. X-axis shows time since January 2000, through August 2020. Recessions are marked by shaded grey bars, denoting the dot-com bubble in the early 2000s, the Global Financial Crisis in 2008, and the current recession which began in March 2020. M2 Money Stock line begins near $4,000 in January 2000 and is currently near $19,000. Velocity line begins near 2.0 in January 2000 and is currently near 1.2. The two lines converged around October 2015. Recently the M2 Money Stock has climbed sharply and Velocity dipped significantly in 2020 but most recently slightly grew. Chart source: Federal Reserve Bank of St. Louis as of December 31, 2020.
Posted on January 5, 2021January 5, 2021 Full size 681 × 368

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Published inIs Velocity Stifling Inflation Amid Record Growth of Money Supply?

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