Velocity of Money

Velocity of Money

Velocity is the output, the product, the services, or how productive our money is from a given amount of investment. Think about the current retirement planning strategies. According to the financial authorities, retirement is going to cost us every penny we have. So the primary goal of current retirement planning strategies is to accumulate money without utilizing it until retirement. This seems to be the opposite of what macroeconomics proves.

 

Our entire economy is produced by a simple mathematical equation of gross domestic product over money supply. This is no different in our personal finances. The equation is simple: output over input.