Velocity and rates

This is velocity, or the number of transactions an some money transacts during one measurement period.  I buy a lawn mower, the store pays wages with my money. We see two changes in accounts, the velocity, or the transaction rate.

OK, it turns over 1.5 times a quarter, down from prior history.  My measurement period is a quarter. So I am a banker, and I cannot see crap until two quarters, not enough transactions for me to get a target.  The banker and the customers just shut down the three month loan business, and focus on one year loans.  Then both lender and borrower collect enough data points to measure surplus from operations.

From queuing theory, the queue of borrowers just dries up in the three month bin.  Neither borrower nor saver queues have any innovative arrivals that justify the fast transaction rates.   So the transaction rate drops, letting the queues build up a bit.  That, effective;y  moves the banking business up the curve.

Regarding curve inversions: Try this chart:

Note the 2000 recession, the 7 to 20 year inverted in about a month, but the recession was  mild. In 2008, the inversion was at the short end, it was panic; the recession much worse.  So, I can easily see a quick 7-20 inversion tomorrow, and a mild recession.