For years pundits chastised Americans for not saving enough, but in the past few years savings rates have exploded from negative to positive 5%. An unintended consequence of that plus banks and companies building up their own cash on the balance sheets leads to the “velocity” of money to plummet.
Money needs to change hands in a vibrant society in the fair exchange of goods and services.
Unfortunately, a liquidity trap can occur and may be occurring now that does not bode well for the economy going forward.
Read more about this at the link before. I’ll keep you updated on this too in subsequent newsletters.