Can someone help me out here?

[Torie]

We will get inflation as the fed expands the money supply buying treasuries, if and when the velocity of money picks up again. It was the sharp decline in velocity as folks stopped spending which was the rub here.

[Person Man]

We will get inflation as the fed expands the money supply buying treasuries, if and when the velocity of money picks up again. It was the sharp decline in velocity as folks stopped spending which was the rub here.

Hmmm...yes...but maybe if they had money to actually spend. Maybe there is not liquitity, even if there was good velocity. Then again, how can you up the velocity if Banks refuse to lend?

[Torie]

We will get inflation as the fed expands the money supply buying treasuries, if and when the velocity of money picks up again. It was the sharp decline in velocity as folks stopped spending which was the rub here.

Hmmm...yes...but maybe if they had money to actually spend. Maybe there is not liquitity, even if there was good velocity. Then again, how can you up the velocity if Banks refuse to lend?

The government essentially lends in lieu of the banks by running up huge deficits. That has been what has been happening.