Silver Rises Over 120% YTD 
Most conversations about inflation start and end with money printing. The Federal Reserve creates currency, prices rise — that’s the story most people have heard. But it’s incomplete, and the gap in that explanation is what makes the next crisis so hard to see coming.
In Episode 7 of Hidden Secrets of Money, Mike Maloney introduces the concept that actually determines when inflation hits and how severe it becomes: the velocity of currency. Understanding it won’t just change how you think about the Fed. It will change how you read every economic headline from here on out.
How Velocity of Currency Actually Works
Velocity of currency measures how many times each unit of currency changes hands in a given period. Maloney illustrates it with a simple example: tip a waiter a dollar, the waiter pays a cab driver, the cab driver buys gas. That single dollar was involved in three transactions — a velocity of three. One dollar, three dollars’ worth of economic activity.
A country with a $1 trillion currency supply and a velocity of five has the same economic output as a country with a $5 trillion currency supply and a velocity of one. The size of the money supply matters — but so does how fast it moves. This is the variable most mainstream economic commentary ignores, and it’s the reason the relationship between money printing and inflation is far less direct than it appears.
When people are anxious — about war, recession, job security — they save. Currency sits in bank accounts. Velocity falls. The Fed can create trillions and see almost no inflation, not because the money isn’t there, but because nobody is spending it. That is precisely what happened after 2008, and again after 2020. Velocity was the buffer — and buffers eventually give way.
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What Weimar Germany Teaches Us About What Comes Next
It’s Weimar Germany — and it maps onto the velocity framework with uncomfortable precision.
When World War One began, Germany went off the gold standard and started printing marks to fund the war. The currency supply quadrupled. Prices barely moved — wartime anxiety caused people to hoard every pfennig. Velocity collapsed. The inflation existed, stored up in the system. People just couldn’t feel it yet.
When the war ended, confidence returned. People started spending the currency they had been sitting on. Velocity spiked. Prices didn’t just rise to match the expanded money supply — they overshot it. By 1920, the exchange rate between gold and the mark had climbed from roughly 100 marks per ounce to between 1,000 and 2,000 [Maloney, Guide to Investing in Gold and Silver]. Anyone who had saved in marks watched 90% of that value evaporate in the space of a year or two.
Then came a brief stabilization — the economy appeared to recover, production rose — before continued government printing broke confidence for good. By November 1923, German paper mills were producing 500 quadrillion marks per day [Maloney, Guide to Investing in Gold and Silver]. The currency had become a hot potato. Nobody wanted to hold it a second longer than necessary. That behavioral shift — not the printing itself — was what turned inflation into hyperinflation. Those who held gold and silver didn’t just survive it. Many came out ahead.
Where the United States Stands in This Sequence
The U.S. currency supply has expanded dramatically over the past two decades — through the 2008 financial crisis, through three rounds of quantitative easing, and through pandemic-era stimulus that dwarfed prior rounds. And yet for much of that period, inflation remained subdued. Velocity fell to compensate, just as it did in Weimar Germany during the war years. The inflation those dollars represent hasn’t disappeared. It’s waiting for a psychological shift.
That shift is what the Fed cannot control. It can determine the size of the currency supply. It cannot determine how fast people spend it. As Maloney and economist Jim Rickards discuss in Episode 7, once behavioral patterns change — once people start expecting prices to keep rising and spend faster to get ahead of them — the feedback loop becomes self-reinforcing. The Fed believes it can dial inflation back with rate hikes. The historical record suggests otherwise. Velocity, once it accelerates, takes on a life of its own.
U.S. gross national debt crossed $39 trillion in March 2026 — adding more than $11 trillion in just five years [Committee for a Responsible Federal Budget]. For the first time in history, all three major ratings agencies have downgraded U.S. sovereign debt below their top rating: S&P in 2011, Fitch in August 2023, and Moody’s on May 16, 2025 [Peter G. Peterson Foundation]. Meanwhile, foreign investors’ share of Treasury holdings has fallen from roughly 50% in 2015 to about 30% today [Congressional Research Service, May 2025]. The U.S. is increasingly borrowing from itself. At some point, that circle stops closing.
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People Also Ask
What is velocity of currency in simple terms?
Velocity of currency measures how many times each dollar changes hands in a given period. A dollar spent at a restaurant, then used by the waiter for a cab, then by the cab driver for gas has a velocity of three — it produced three times its face value in economic activity. The Federal Reserve tracks this as the velocity of M2 money stock.
Why doesn’t money printing always cause inflation immediately?
Because inflation depends on both the money supply and how fast that money circulates. When people are fearful or uncertain, they save rather than spend — slowing velocity and delaying the inflationary effects of currency creation. The inflation doesn’t disappear. It waits for a shift in psychology and confidence.
What happened to savings during the Weimar hyperinflation?
People who held their wealth in German marks watched purchasing power fall by roughly 90% in the span of a year or two [Maloney, Guide to Investing in Gold and Silver]. Those who held gold or silver were largely protected — the metal retained its purchasing power as the currency collapsed around it.
Can the Federal Reserve stop hyperinflation once it starts?
History suggests it is extremely difficult. Once the behavioral shift toward faster spending takes hold, it becomes self-reinforcing. Rate hikes severe enough to break the cycle typically cause severe economic pain, and political pressure to reverse course is enormous. As Maloney and Jim Rickards discuss in Episode 7, the Fed believes it can control velocity — but velocity is a psychological phenomenon, not a monetary one.
What does Mike Maloney say about gold during a currency crisis?
Maloney’s central argument in Episode 7 is that gold and silver have historically repriced upward during periods of currency debasement to reflect the expanded money supply. He points to both the Weimar hyperinflation and the 1980 gold peak as examples of this mechanism in practice — each time, those who held physical metal preserved their purchasing power while holders of paper currency did not.
Sources:
Maloney, Michael. Guide to Investing in Gold and Silver. Hachette Book Group, 2008. (Weimar Germany currency and price data)
Committee for a Responsible Federal Budget — U.S. gross national debt milestones: https://www.crfb.org/press-releases/gross-national-debt-reaches-38-trillion
U.S. Congress Joint Economic Committee — National debt monthly updates: https://www.jec.senate.gov/public/index.cfm/republicans/debt-dashboard
Moody’s Ratings — May 16, 2025 U.S. sovereign credit downgrade: https://www.moodys.com/web/en/us/about-us/usrating.html
Peter G. Peterson Foundation — Summary of all three agency downgrades: https://www.pgpf.org/article/moodys-downgraded-its-us-credit-rating-and-warns-that-recent-policy-decisions-will-worsen-fiscal-outlook/
Congressional Research Service — Foreign holdings of federal debt, share decline from ~50% to ~30%: https://www.congress.gov/crs-product/RS22331
Bipartisan Policy Center — Foreign investor share of U.S. Treasuries: https://bipartisanpolicy.org/article/foreign-investors-hold-a-shrinking-share-of-u-s-debt/
Federal Reserve Bank of St. Louis — Velocity of M2 Money Stock (FRED): https://fred.stlouisfed.org/series/M2V
New York Times, February 1923 — Referenced in Maloney, Episode 7 transcript (historical archive)
Disclaimer: This article is for informational purposes only and does not constitute investment advice. Past performance is not indicative of future results. Always consult a qualified financial advisor before making investment decisions.
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