Dude, ever heard of unemployment at 20%??? Doesn't that warrant your theory on velocity? Where would it come from when consumer is not even able to feed themselves?
Fear or no fear, there will NOT be any velocity for many many years to come.
Today's interest rates call will be interesting. I am betting they will jack up or at least change their wordings. Why? Republicans won 2 seats even after president himself parading for democrats. That is a big blow and i guess reality is sinking in that public can control the destiny after all. :-)
You don't seem to understand. When prices are constantly increasing, that means the price of groceries goes up each day you wait. Therefore, people must spend their money as soon as possible. This is what will increase the velocity.
Likewise, the only reason the velocity is down, is because prices are falling. People can hold on to cash as long as possible. The longer they hold, the cheaper items get.
As soon as inflation arrives, velocity must increase, or people will lose their purchasing power.
I agree that last nights elections are a big blow and is evidence people are sick of the out of control spending in Washington and are turning to the Republicans...but words won't spark a rally in the dollar, only actions. Again, actions speak louder than words.