The Velocity of Money and Trade Options

Without making this complicated, it will help each of us to understand the principle of the "Velocity of Money".  This will seriously affect your life as economic trends, inflation, the national debt, and excessive taxes tend to shrink the cash flow of the typical family.  You may have no control over the tides of economic idiocy, but you can take strides today to be less impacted by inflation, taxation, and shortage by using well-proven, alternative money strategies.

Velocity of Money

To illustrate the "Velocity of Money" let's start with a singe dollar bill.  Martha uses a dollar to buy a loaf of bread and that dollar stays with the bread maker who hoards it away.  The economic impact of that one transaction is one dollar of value in the community.  Others get no value from the transaction because Martha's family eats the bread and the baker is a cheapskate who begrudges every expense he is forced to make.  What a miserable life it is for the baker's wife and family.  but ....

In the second example on Monday, Martha buys a loaf of bread from the baker who in turn spends that same dollar to buy flour. ($2 spent).

The wholesaler who sold the flour paid the delivery person ($3 spent) who took part of his pay to buy a pair of shoes for his son ($4 spent).  

The shoe store owner needed a better sign, so he paid the signmaker for a new sign ($5 spent).  The signmaker purchase his paint from the paint store. ($6 spent), and the paint store paid the deli for lunch ($7 spent).  The deli paid the grocery store for the groceries to make their sandwiches ($8 spent).  And the grocery store paid the farmer for the vegetables they supplied ($9 spent).  

Last of all Martha collected her paycheck on Friday for the work she did sorting and packaging vegetables at the farm.  ($10 spent)   

Question?  Can one dollar create $10 in economic prosperity?  If you understand the velocity of money, it can!  The more that we spend money, the more prosperity and opportunity it creates. 

It is not just the amount of dollars that are in the public domain that impacts the economy.  In fact flooding paper money into the economy causes hyper-inflation and disaster.  The volume of transactions of the money supply is actually a greater indication of economic health.  This is a practical reality that every business understands.  So, it is not holding money that creates a good economy, but spending it wisely that can drive a good econoly and create wealth for the people.

Finally, what if there were more money in the hands of people and more transactions happening in any city.  That is called prosperity.

When governments suck out money in wild spending, taxes go up, and banks limit access to credit; the economy struggles.  What if there were Troptions that had no such limits and people could sustain the local economy and provide for their families even though government currency was in short supply?  

Barter or trading provides an alternative that may well be a sanctuary for wealth and livelihood in good and hard times, digital currency is here and Troptions may be your safe haven in tough times.