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Data: Federal Reserve Bank of St. Louis; Chart: Axios Visuals

Coins and bills in circulation make up only 10% of the money supply today, Deutsche Bank Securities chief economist Torsten Sløk points out in a note to clients.

What it means: The majority of the money supply is now used by the Fed for its balance sheet and in the banking sector to purchase financial assets.

  • As such, the velocity of money has slowed dramatically, and "an increase in money supply relative to GDP is having a negative impact on inflation," Sløk says.
  • "[Y]ou can increase the Fed balance sheet and the money supply as much as you want, if the money goes into asset transactions rather than GDP transactions it will not be inflationary."

Background: "The velocity of money is the frequency at which one unit of currency is used to purchase domestically-produced goods and services within a given time period," according to the Fed.

  • "In other words, it is the number of times one dollar is spent to buy goods and services per unit of time."

The bottom line: Velocity looks set to slow further as the central bank ramps up its balance sheet expansion to an expected level of nearly half of U.S. GDP this year.

Go deeper: The Fed goes to war with coronavirus

Go deeper

Trump says he'll spend "whatever it takes" of his own money to win

President Trump told reporters on Tuesday that he'll spend "whatever it takes" of his own money if necessary to win in November, stressing that it's "the most important election in the history of our country."

Why it matters: The comments come after reports that Trump's campaign is having real money concerns — an unusual position for an incumbent that has worried GOP operatives. The campaign has yet to release its August fundraising, but Joe Biden and the Democrats say they raised a record-breaking $364.5 million last month.

Updated 16 mins ago - Axios Twin Cities

In photos: Twin Cities on edge after Daunte Wright shooting

Police officers form a line as they face off with demonstrators protesting the death of Daunte Wright outside the Brooklyn Center police station on April 12 in Brooklyn Center, Minnesota. Photo by Scott Olson/Getty Images

There were tense scenes in the Twin Cities suburb of Brooklyn Center Monday night, after demonstrators defied a 7 p.m. curfew to protest for a second night the fatal police shooting of Daunte Wright.

The big picture: The curfew was announced following a night of protests and unrest over the killing of Wright, 20, during a traffic stop Sunday. Following peaceful protests and a daytime vigil, police again deployed tear gas during clashes with protesters Monday night, according to reporters on the scene.

Japan to release Fukushima water into sea

People near storage tanks for radioactive water at the Fukushima Dai-ichi nuclear power plant in Okuma, Fukushima Prefecture, Japan, in 2020. Photo: Tomohiro Ohsumi/Getty Images

Japan's government on Tuesday announced plans to release more than 1 million metric tons of contaminated water from the destroyed Fukushima nuclear plant into the Pacific Ocean following a treatment process.

Why it matters: While the Biden administration has said Japan appears to have met globally accepted nuclear safety standards, officials in South Korea, China and Taiwan, local residents, those in the fishing industry and green groups oppose the plans, due to begin in about two years, per the Guardian.