These are very good points. And I suspect that velocity is down partially as a reaction to the very low interest rates.
A hidden productivity deflation is something that is suspected to have occurred during the Roaring 20s. It’s very possible that we could be in that situation again.
I suspect that what currently appears to be inflation is a result of globalization, competition from China for purchasing items where we didn’t used to have to them competing. That’s higher prices due to supply and demand.
There’s an argument for the gold standard but we would have to free the US Dollar from being the world’s reserve currency. Triffin Dilemma would return IMO.
My own work and that of other scholars showed that on eve of Crash, most companies’ stocks were in fact appropriately valued; that there was little evidence of a “bubble,”; that investors did know what they were buying; and that the money supply had lagged behind production and productivity.
But I always thought velocity was a factor of trust: if you didn’t trust the money, you spent it faster to get real stuff. Lack of velocity indicates huge trust in the money supply, which could be argued to support the notion that there is a massive productivity wave that hasn’t been monetized yet and that people instinctively know it.
It’s the only reason I can figure out for us not having hyperinflation with a $17 trillion debt.