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I’ve often said that we have the best-looking horse at the glue factory with respect to our economic strength. The lack of business investment, debt based stock buybacks and other poorly considered economic, policy and business strategies has contributed to a steady slowing of the velocity of money since the beginning of the new millennium. Looked at another way money changing hands is economic activity as people and entities engage in various transactions, the speed that this occurs reflects economic efficiency and vibrancy. A recent presentation by PhD Lacy Hunt, a very astute individual, showed that the velocity of money in the US has declined steadily from just under 2.2 in 2000 to 1.5 in 2015. Europe saw it decline from 1.7 to 1. Japan’s comatose economy saw velocity of money drop to .6 from .9 while the Chinese came in dead last after their figure fell from .8 to .5 a damming example of their record non-productive asset bubble. That said all the entities mentioned show steadily declining rates of economic efficiency. Factor in debt as it has steadily increased over the same period, and you have a toxic mix that will not end well.

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