why is the velocity of money slowing down 
the velocity of the m1 money supply has steadily decreased since the recession of 2008 according to figures from the federal reserve bank of st louis 4much of that decline has been attributed to demographic changes and the effects of the great recession with baby boomers approaching retirement and household wealth greatly reduced many consumers were more incentivized towards saving than before federal regulations may have also played a role as the dodd frank act increased the reserve requirements and leverage ratios for banks because these institutions were required to keep more of their assets rather than lend or spend them there was less money to move in the economy one factor in the slowing velocity of money is not a mystery the covid 19 pandemic the velocity of money fell sharply in 2020 likely due to the increased economic uncertainty combined with the influx of stimulus payments 