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The Sluggish Economic Recovery

by Ken Vincent, Featured Contributor

I’VE HEARD VARIOUS politicians espouse their theories on why the economic recovery is so slow. These, mostly academicians and lawyers, blame all kinds of conditions, and mostly people in the other political party.

I haven’t talked to any business man/woman that feels printing and borrowing money to dump into the economy is the best way to kick start it. What that course of action did accomplish was to create a economy-sluggishmountain of debt and a bloated balance sheet.

After dumping a monstrous amount of money into the economy via stock and bond purchases and zero interest loans, the economy basically has developed a bad case of indigestion. So what happened to all that money that was supposed to be the catalyst for economic recovery?

Well, it seems that the banks stashed some 2.8 trillion dollars in their vaults. Toss in another 2.1 trillion dollars that individuals put away, and add some similar amount that businesses have salted away and you have the answer. All that new money never got into circulation.

The end result has been that what new money made it into the market place has turned over some 4.4 times before being taken out of play. Normally new money circulates over 17 times before it is fully assimilated.

So, that is my theory on why the economy is still slogging along in a muddy ditch.


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Ken Vincent
Ken Vincenthttp://sbpra.com/KennethVincent/
KEN is a 46 year veteran hotelier and entrepreneur. Formerly owned two hotels, an advertising agency, a wholesale tour company, a POS company, a leasing company, and a hotel management company. The hotels included chain owned, franchises, and independents. They ranged in type from small luxury inns, to limited service properties, to large convention hotels and resorts. After retiring he authored a book, “So Many Hotels, So Little Time” in which he relates what life is like behind the scenes for a hotel manager. Ken operated more that 100 hotels and resorts in the US and Caribbean and formed eight companies. He is a firm believer that senior management should share their knowledge and experience with the next generation of management.

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