Small Business Owners need to prepare for inflation.
Who dares to mention the word recession anymore? Now, we have another robust jobs report just when the economy seemed to be cooling. Fortunately, there is a consistent explanation. The velocity of money. The velocity of money fell to almost 1.0 during the pandemic, the absolute floor. Velocity was never going to stay at one in a fractional banking system. This paper shows the strong relationship between velocity and real interest rates and the loan-to-deposit ratio.
I put this analysis together to help me understand the COVID-19 situation while I am confined to shelter in place in California. I am sharing it with other managers to help decision-makers understand this fluid, ever-changing situation. Let's all stay strong. #beatcovid19 #beatthecoronavirus #covid19 #staystrong
