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Monetary Policy Missteps

Monetary Policy Missteps

Monetary Policy Missteps

The root cause of the falling velocity of money lies in the government policy choice of distributing the unprecedented monetary base increase to corporations and not to consumers. Consumption is approximately 70 percent of the GDP. Thus, consumers would have not hoarded or use the unprecedented monetary base increase to buoy financial markets, they would have spent it on goods and services, and the velocity of money and incomes would have not declined.

Ellis

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