Understanding the Contradiction of U.S. Dollar Abundance and Declining Velocity

The Curious Case of the Cascading Dollars

In a world where U.S. dollars seem to be breeding like rabbits, there lies a paradox so perplexing it could be an episode of a sitcom: More dollars are circulating less than ever. The Federal Reserve recently spilled the beans on August 31, revealing that despite the M2 money supply climbing to an astonishing $18 trillion in 2020—thanks to measures taken in response to the pandemic—the velocity of this cash has plummeted like a stone. We’re talking about a velocity under 1.125, which is like hearing that your favorite rock band hasn’t sold a single ticket since the 1940s!

The Rise of Cantillionaires

So, what’s the deal? Well, it appears there’s a new breed of elite emerging, aptly dubbed the “cantillionaires.” These are the individuals who find themselves nearest to the money printer—metaphorically speaking—and they’re cashing in while the rest of the economy barely sees a dime. Max Keiser, an RT host and self-proclaimed financial guru, has pointed out that trillions of dollars are printed but not making their way into the hands of the everyday folks who need them most.

“This is the only chart that gives you the best picture of what’s happening. It explains everything,”

Keiser tweeted, highlighting the stark contrast of the situation.

Liquidity Pools or Money Swamps?

Think of it this way: we have vast pools of liquidity just sitting around like a lazy cat sprawled on the couch, with little incentive to get up and do something productive. The money is there, yet it remains static, stuck on the Fed’s balance sheet. Therefore, the ones getting the most bang for their buck are those in the inner circle of money creation.

The Dollar Facing the Music

Meanwhile, the U.S. dollar is performing what could be characterized as a lame tango against other major currencies, plummeting to multi-year lows. Over in Europe, they’re experiencing a bit of an inflation soap opera, where the Central Bank’s aggressive money-printing antics haven’t quite managed to deliver the desired results. It’s like the classic case of trying to lose weight while devouring a cake every weekend—just doesn’t add up!

In Bitcoin We Trust?

While the dollar’s velocity hits rock bottom, Bitcoin serves as a reminder that not all currencies are created equal. With its predictable supply chain and hard cap, Bitcoin is thriving like a houseplant on a sunny windowsill, encouraging investors to save rather than spend. Kraken’s Dan Held mentioned recently that the supply readings bode well for Bitcoin’s next bull run. As the world grapples with inflation and staggering global debt, the hard asset appears to be an enticing option for those looking to escape the clutches of the fiat collapse.