Money Makes the World Go ‘Round

 In General

It is time to be creative in developing platforms to increase the circulation of money for the common good both locally and globally.

Big box retail, “too big to fail” banks are useful in many ways. But, unfortunately, they have become the biggest leaches of local capital next to gas stations, taking money that could benefit the local economy out of circulation to fatten the wallets of corporate managers somewhere else. The “” movement inspired by the Occupy Wall Street movement, awakened consciousness to this fact, leading billions back to local community banks and credit unions.

Research back in 2011 by the in the United Kingdom, found massive benefits to local economies from residents buying local. They found that double the amount of money stayed in the local community when people shopped at a farmer’s market as opposed to a supermarket chain. NEF spokesman David Boyle said: “Money works like blood – it needs to circulate around the local economy if it is going to keep it alive. Money spent in large supermarkets instead of local businesses pours straight out again.”

What this makes clear is that it’s not low cash flow causing local economies to suffer, but the lack of circulation of money in the local economy. Therefore, one of the primary focus areas of an impact investor should be to increase the “velocity” of money in the areas they are invested in. The faster money circulates, the more hands it passes through, the more people benefit from it.

Using this principle, the question then is should impact investors not be judged on how they have helped the money go ‘round?

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