so when velocity is collapsing anyone or any company or any country with debt collapses and the collateral that still exists a house a car a building whatever it is that goes into the hands of generally Banks because that's who is on the other side of the loan and then I want to show what happens [Music] next hi everyone and welcome to this video I've got Alan hibd with me once again and Alan is going to be making a presentation to me Allan how are you doing I'm great Mike thanks good so


you've got so this is sort of a continuation of the great taking and uh in the book he talks about velocity and you've put together a presentation for me so uh let's get into it and and uh see what you've got yeah thanks in this video I really want to answer two questions what is velocity of money and why does it matter for the average person so the first thing I have here is an explanation from the great taking velocity is the number of times that a unit of currency is spent to buy goods


and services in a period of time okay so basically you can think of it as the number of times that the average dollar moves around the economy in a given year yeah how many times it changes hands yeah exactly so it's a pretty simple concept actually so the way we calculate it okay is by comparing the value of all goods and services produced in a period of time GDP okay and then we divide that by essentially how many dollars exist so the value of all cash and deposits which could be used nearly as easily as cash


okay and and the equation here is that velocity is equal to GDP divided by the money supply excellent awesome so in order to understand it I have a couple Graphics here um velocity of money can go up really in two different ways either when GDP goes up velocity will go up or when the money supply goes down velocity will go up okay so that's yes because you've got if if your GDP is is increasing in the currency Supply is fixed you have to use those dollars more often if GDP is fixed but the currency


Supply shrinks the um the different so you know the difference between currency and money back in in the uh when we used gold uh it couldn't vanish it didn't come out of anywhere uh and now we've got uh uh currency that can uh instantly appear and disappear so if the if if more of it when currency is com constantly springing into existence with a loan and then being extinguished if people decide not to borrow and to create more loans tomorrow than we had yesterday uh then the currency Supply can start to go into


a collapse uh because they're paying off debt and when you pay off debt you're extinguishing dollars that were borrowed into existence in the first place and so the currency Supply if it shrinks but GDP stays the same there are fewer dollars that have to be used in this we've got the same amount of transactions in a year but fewer and fewer dollars to make those transactions so each dollar has to be used more often right yeah exactly so in just a minute we're going to look at some charts of


velocity so we can see if it goes up or down over time but first I just wanted to give everyone an intuition of what would cause it to go up or down and again velocity can fall when GDP Falls so that's not good or it can fall when the money supply grows too quickly and we're going to see some examples of that in just a second so and the GDP doesn't have to be fixed like in the uh first example uh if GDP is growing quicker than the money supply the money supply doesn't have to be fixed in that one


they can both be going up but GDP going up faster the next one uh they can both be falling but the money the currency Supply uh has to fall faster than GDP and velocity goes up and then in the SEC the red uh scenarios if GDP is falling uh faster than the currency Supply uh velocity Goes Down And if the currency Supply is growing faster than GD P the velocity goes down exactly exactly and so a natural question that comes out of this is okay do is it better for velocity to go up or down like like which is better and uh


well let's try to answer that so in a healthy economy I would argue that GDP increases okay I think we would kind of agree with that and to your point the point you made a second ago usually at a faster rate than the money supply so that means that the velocity of money slowly increases so if the GDP grows faster than the money supply velocity grows that's generally a good thing in a sick economy GDP generally declines although it doesn't have to which means that velocity Falls a little on its own


when GDP goes down velocity goes down but sometimes the money supply increases while GDP decreases and the net effect is for velocity to collapse giant downward red arrow collapsing so in this case GDP is moving down to cause velocity to go down and money supply moves up which also causes velocity to go down so it's it's like a double negative here and by the way if anyone wants to see this uh in an animated format they can check out hidden secrets of money episode seven Mike you have a a


great presentation here where you explain this all in a visual it's wonderful and so why does this matter well coming back to the great taking collapse in the velocity of money is exactly what was unfolding from the 19th century and leading up to the Great War within a few years the Russian austr Hungarian and ottoman Empires ceased to exist we have entire Empires that ceased to exist as did the Ching Dynasty the German economy was destroyed Then followed the Great Depression then the second world war and the slow collapse


of the British Empire no populations were un unscathed there were no winners so this is why velocity matters when a collapse in velocity of money happens entire Empires disappear off the map it's a really big deal so were there or were there yeah or were there that's where I was going to next there were no winners or were there yeah were there well while there was widespread deprivation selected banking interests took the collateral of thousands of banks which were forced to close as well as of the great many


people and businesses large and small the indebted so when velocity is collapsed colling anyone or any company or any country with debt collapses and the collateral that still exists a house a car a building whatever it is that goes into the hands of generally Banks because that's who is on the other side of the loan and this happened inor right yeah massive massive quantities so that's what happened back then and I want to show what that looks like in a chart here this is from the gray taking


goes from 1900 and I I chopped it off here at about 1995 I'll show you the rest of it in just a second but you can see velocity of money is falling it's collapsing until about the end of World War II and then it recovers again so Mike when you look at this what do you see uh well yes I see that uh collapse into the Great War and then we you know World War I and then from uh 1913 to 1918 you see that huge spike in velocity and uh uh that also uh goes right along with the uh so I don't This Is Us velocity um that goes


right along with the Federal Reserve the Inception of the Federal Reserve and a bunch of printing uh where they the Federal Reserve Act didn't specify full backing by gold it specified 40% backing by gold which means for every $20 gold piece they could now print $50 so they could they already had a $20 bill in circulation representing that gold piece but now they could put another 20 and a 10 in circulation that came out of nowhere it's fractional Reserve Central Banking uh and then the further collapse


uh causing the depression of 1921 and then we've got the Roaring 20s where it sort of goes along stable and then you get to 29 and you look at that collapse and that collapse went along with a collapse of the currency Supply I've read monetary Milton Friedman's monetary History of the United States from 1867 to 1963 to 1960 and um uh during that period of the Great Depression from uh 29 to I believe 33 there was about a onethird contraction of the currency Supply 33% of the currency Supply


vanished and you know that was when the base of the currency Supply was gold that can't vanish this is the thing about currency versus money uh um money uh prevents uh this collapse in the currency Supply and there isn't any reason that we could you we couldn't use it I believe that we would be much more prosperous if we had a lot of people think that oh well with all this credit we've had such great growth over the past hundred years but um what we have is these Sprints and then we fall down


you know we we we have this big contraction we would still have those with gold except uh the the um the Sprints wouldn't be as big but the collapse would be much much smaller and on the whole what has created Prosperity isn't credit it is uh it's Innovation and uh gains in efficiencies uh and all of the stuff that we have invented uh over the past 100 years we should be much more prosperous than we are these booms and busts created by credit expansion and the Federal Reserve uh I believe set us


back so anyway uh go on with the presentation this is this is fascinating and but you can see I mean in his book uh he talks about web talks about uh this isn't this the great taking isn't the first taking uh you know you look at that era where this is all falling and there was a taking that was going on then but the the it sort of uh crescendoed with the Great Depression and there we have velocity and the currency Supply collapsing in massive deflation and when you get into deflation the prices of all the assets


fall below the debt that you owe on them you can't sell them because you can't sell them for uh enough to be able to pay the debt they've they you're now upside down and so the bank can take them and the bank gets to keep everything that you've paid so far on it and and as you know with a loan the first portion of the loan like uh you know a 30-year mortgage for the for 15 years you're paying mostly interest there's very little principle that you're actually paying and then the bank


can take the property and sell it again and even if they're selling it at a slight loss from what the loan is overall they have made a big profit yeah exactly so just just to emphasize what's going on here it's really a tail and two parts it's this giant uh decline in velocity here where a bunch of people and even countries lost everything and then there's there's a recovery that goes from the end of World War II till about 1995 where things generally got better yeah and


then I want to show what happens next so after 1995 velocity of money declines again and it's it's not just an echo of what happened before this dropped from oh about 2.1 down to maybe 1.2 we were we started at a higher level than we were back then in 1900 and now we're at the lowest level for the velocity of money than we ever have been even lower than after the Great Depression and the second world war and it and we fell there even faster so this this first decline took about 46 years


this this recent one about half that maybe 23 years so we're falling twice as quickly as we were back then and entire countries were wiped out this is this is crazy this is printing currency uh faster than the growth of GDP and the one thing that the Federal Reserve can only have a slight influence over and uh can't directly they can directly control interest rates by creating currency and buying assets or selling the assets that they have in stock and destroying currency um and that can make it can


have a direct influence on interest rates almost instantly uh and uh but velocity is uh largely determined by the mood of the public it's determined by GD GDP versus the currency Supply we've seen that uh now uh the the bottom part of this thing where it just sort of falls off a cliff that coincides with the lockdowns so GDP um the the currency Supply was expanded and GDP collapses when nobody's allowed to go out uh and restaurants are closed and everything else and so this is um more the public


um uh the the the market exerting influence over the economy where the Federal Reserve cannot control it um but they they do so by create you know they created tons of currency uh it's just that currency circulates less and so you've got GDP was growing during that period but they were creating a lot more current they were creating currency than faster than GDP growth yeah exactly so um I want to read one more thing from the great taking kind of addressing uh what's been happening lately hi I just wanted to


take a moment and thank you for subscribing and mention that if you'd like to help our Channel please consider my company goldsilver.com the next time you buy precious metals we're one of the most trusted names in the industry our prices are sharp delivery is fast and we have an insiders program where you find out exactly what I'm doing with my own Investments thanks for making goldsilver.com your dealer and now back to the video he says we are now living within a replay of this monetary


phenomenon I.E a profound decline in the velocity of money which began when velocity peaked in 1997 this was coincident with onset of a major Global financial crisis known as the Asian financial crisis and it was followed within a few years by the do bubble and bust this is my emphasis here but it's his words such a collapse occurs when the economy is not growing despite very high rates of money creation this is exactly what you just said Mike this exactly what we've been dealing with velocity of money has now contracted to


a lower level than at any point during the Great Depression and World Wars once the ability to produce growth by printing money has been exhausted creating more money will not help it is pushing on a string the phenomenon is irreversible he's absolutely right there except he calls currency [Laughter] money uh yeah I mean and what is happening right now is um we're seeing a slow fed is trying to normalize their balance sheet and they can't we are in this period uh where uh ever since Ben


Bernan uh changed the way the uh Fed works and the way the economy Works back in 2008 when we've been in this emergency since 2008 which people are going to see in an upcoming video um the uh ever since he did that um uh they've they've got they've had this huge balance sheet and and they're trying to normalize the balance sheet again every time they do this it causes a crisis and uh but right now we've seen a large contraction in the currency Supply and if velocity slows and we're having this


contraction that causes eventually causes deflation deflation of asset prices deflation of uh retail prices eventually and uh so I believe that you know everything that he said in that book goes along with my roller coaster crash that we're going to see big inflation which we just saw followed by a deflation which will just scare the hell out of the Federal Reserve and the world's central banks and they're going to print and print and print until deflation gets gives way but during that


deflation the public gets scared and they sort of pull in their horns and they stop spending and I'm already seeing in well I'm not in Puerto Rico right now uh I'm in uh Utah uh but um when I in Puerto Rico recently I noticed that during the week the restaurants that used to be full are now half empty uh and uh that there's been a big slowdown in spending and so I believe that we are now in a recession uh it's just that it won't become official for three to six months um


and uh what we need to look for now is the reversions of uh all of the inverted yield curves uh and because that is usually when the recession starts they they invert before and then revert back to uh normal and the recession starts uh so I think we need to keep an eye on this velocity and on the uh size of the currency Supply because during after 1929 they were both collapsing simultaneously that's what brought on the Great Depression That's What trapped everybody backwards in deflation and


they uh they in debt and they lost everything and what he's talking about is a repeat of that on a much grander scale because uh the debt levels that we have now are many times what what they had in the 1920s yeah exactly Yeah well yeah I mean thank you Mike for all your expertise and for being here today thanks for making time from Utah um and so this is sort of a uh a nice summary of what velocity of money is and why it matters I know that I was always taught that all these separate crises were were indeed


separate but when I look at a chart like this I realize that they're part of a longer systemic Trend and that they are all connected you know 2001 2008 2020 and whatever comes next um so so that's why velocity of money is so important why why you and I and everyone should keep an eye on it why people should read the gr Tak they should watch our video on it and uh they should get ready yeah I just want to ask everybody if if you think the the video on the great taking is important uh you know copy paste the


URL into a uh email and send it to your friends and loves loved ones that you think need to know about this and then uh if you want to help us out there was a video back at Thanksgiving uh where a lot of people would just revisit that video the next day and let it play even if you did watch it a second time and if you can help us out by doing that with this video or not this video but the the great taking video uh that has already been released um uh that would help it gets into the Google Al the uh YouTube


algorithms and it becomes recommended uh viewing and uh so it be it takes on a little life of its own because right now YouTube does have us throttled we don't seem to be able to get past uh the you know know they I guess they don't like our content and uh they uh want to sort of suppress this knowledge but I believe that this is really important and that people have to get ready I'm taking steps right now because when I read his book it's written from a little bit of a conspiracy theory uh point of view which


is too bad because he didn't need to do that because all of these pieces have been put in place and regardless of whether it's conspiracy theory or it's just the banks trying to uh make sure that uh uh they are protected and it's not going to be a uh you know it won't be a taxpayer bailout this time it's going to be a depositor bailout a uh it's going to be taking your uh Securities your stocks your bonds uh your house uh all of your other assets so it's good to not be in too much debt


probably I I I don't make recommendations but personally uh this is what I am doing and uh uh and holding physical assets it's time for real stuff not a bunch of paper stuff because that paper stuff can vanish and according to the great taking and all of the laws and and uh um regulations court cases banking regulations they've all been changed so that they can do this and the Very fact that all those pieces are in place doesn't require a grand conspiracy uh it just says that these are dangerous


times and you need to know what's going on and protect yourself exactly well Mike I got one more question for you where does the FED store their US dollars I don't know alen where in the basement hilarious okay I want to thank you for this presentation Allen I want to remind everybody to uh hit that thumbs up and so like this subscribe and smash the notification Bell and thank you Alan we'll see you next time thanks