looking at the above money velocity graph however, it appears that this increase in the money supply has not yet filtered into circulation though. Where is it? who has it and what are they doing with it? I have a theory.
Where is it? The Gov loaned it to banks at zero interest.
The banks loaned it back to the gov at about 3% interest.
It is right back where it started except now Bronco Bamma is flush with cash to give the leeches free phones and welfare.
People forget America isn’t a closed system. All kinds of foreigners hold US dollars because their own currencies are in a more hazardous situation than the US dollar.
If you’re newly rich in China, are you going to trust the Chinese government to protect your wealth? How about a European with confiscatory tax rates? Or how does a drug lord protect his wealth?
Owning gold isn’t practical or even possible for a lot of the wealthy.
Banks hold it as reserves.