The Covid Crash And The Death Of Money Velocity (All Downhill Since 1997)

Today’s jobs reports showed that labor force participation did not improve since May and remains substantially below pre-Covid levels.

Over the longer term, we can see that M2 Money Velocity (GDP/M2 Money) peaked around the same time that US labor force participant peaked (1997). And it has been downhill since 1997 with Covid accelerating the decline.

So, it is not just Covid that is killing money velocity and labor force participation. I wonder if The Gramm–Leach–Bliley Act (GLBA), also known as the Financial Services Modernization Act of 1999, had anything to do with M2 Velocity getting crushed?

Nothing has been the same since The Clinton Administration, Alan Greenspan and 1997. The bubble, the housing bubble/financial crisis, now The Fed bubble.

3 thoughts on “The Covid Crash And The Death Of Money Velocity (All Downhill Since 1997)

  1. What year was NAFTA enacted? Find the year on the charts you posted and see what happened to the lines after that year.


  2. Look larger than mere NAFTA or Dodd-Frank: when money is so cheapened that it kills off yield, destroys bona fide investment and saving and replaces it with betting, when money becomes “liquidity” to be solely used in gambling in financial assets and when the vast, vast majority of the newly-printed lucre is tied up inert in those assets, is it any wonder that velocity steadily approaches near-zero?


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