The problem is that many of the old economic formulas using the velocity of money weren't updated with the speed of electronic money factored in.
The actual speed that money changes hands now is down to milliseconds in some cases. I can put an item for sale on Ebay and it literally can sell in a few seconds I can then take my Paypal and pay a bill electronically seconds after the Ebay transaction wherein the bank I paid the money to now has it available for a loan. That entire transaction starting with the sale to loan availability can literally be done in under 10 seconds.
15 years ago (or less) the same transaction string would have taken weeks. Now that loans have tightened up and Credit Cards are tightened up these breakneck electronic transactions are ceasing. (Lots of folks have no Credit Limit left on their Credit Cards because each time they pay down the balance 1000 bucks the Credit Card company lowers there credit limit by 1000 bucks. Thus their ability to make electronic transactions is nil and they resort to cash which slows down the present day velocity of money by magnitudes!
Quite correct; and it’s going to get a lot worse before it gets better because of the persistent high unemployment.