Can Mom Entrepreneurs Affect The Velocity Of Money?

What is the connection between Mom Entrepreneurs, the “Velocity of Money” theory, and the “Multiplier Effect”? You may have noticed that at “One Nation Under Mom” we are obsessed with Moms who use their entrepreneurial spirit to launch projects, businesses, or initiatives that reduce disease, obesity, and unemployment rates! A key component of our agenda is to get Moms to spend their dollars locally, yes. But we also want moms to be entrepreneurial problem-solvers. Why?

At “One Nation Under Mom”, we believe that the following 3 concepts determine the economic strength of any given area:

• The theory of the “Velocity of Money”
• The “Multiplier Effect”
• The quantity of Money

Put simply, this Velocity of Money theory argues that the faster money moves from one place to another place or one person to another person in any given area, the stronger the economic health of that area will be. In a place like New York City, money is changing hands at the speed of light; conversely, in East St. Louis, IL, money swirls at the pace of a snail because there is little to no economic activity. This is a Keynesian notion and while we do not fully contribute to his line of thinking, on this particular point, we are convinced.

The Multiplier Effect states that every $1 dollar spent locally may have up ~$3 or more of economic impact on your economy. How does that work? Well if Mom entrepreneurs run a business locally, they are likely to:

• Hire local workers who then spend money locally
• Hire local accountants who then hire workers who then spend locally, etc
• Hire local attorneys
• Source inventory, supplies, and other inputs locally, which in turns creates more jobs & economic activity

When a client or customer spends their dollars at a local Mom-Entrepreneur’s business, those dollars have a “Multiplier Effect” that ripples through many layers of a local economy. This simply isn’t true when you shop at a Big Box National Chain Store. Bottom Line.

As a supplement to the “Velocity of Money” exchanging hands for goods and services and the resulting “Multiplier Effect”, at “One Nation Under Mom” we also point out that the quantity of dollars circulating in any given area will be a determining factor in that area’s economic strength.

Are we agreed so far? Our premise is that the local economies with the most money changing hands at the highest rate will be the strongest. Does that make sense? And it is generally agreed that most Moms want to live in strong economic areas, yes?

So what are the two easiest way to increase the Velocity of Money, the Multiplier Effect of Money,  and the Amount of Money swirling in your local economy?

1. SPEND YOUR DOLLARS LOCALLY: Local businesses thrive when Moms spend there dollars there; when Moms spend your dollars at Big Box Retailers, you are simply: exporting your dollars out of your economy, lowering the total amount of dollars in your economy, and slowing down the velocity of money in your area because the dollars that would have swirled locally just took a one-way trip to a bank account of some national or multi-national company probably based somewhere far from your zipcode.

• Be a Mom-Entrepreneur: Start a project, business, or initiative that fills some gap. Maybe there was something you wanted to buy from a local business owner but couldn’t find one selling the product you wanted such as chemical-free soap: well then start or a soap company! This way you would be reducing people’s exposure to harmful chemicals and getting more dollars to circulate through your local economy. You would probably end up hiring workers and they would spend locally too.

Do you see how the process repeats itself the more we spend our dollars in ways that actually benefit your local economy? The choices that Moms and Mom Entrepreneurs make directly impact the strength or weakness of your local economies!

ACTION TO TAKE:

1. Reduce the amount of dollars that you spend at businesses such as Big Box Retailers that are NOT based in your zipcode or state.
2. Increase the amount Moms spend as close to where you live as possible.
3. Be a Mom Entrepreneur and start a local business business/project/initiative that fills a gap: Be a Problem Solver! You can do it!

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Tags: Big-box store, Community-based economics, entrepreneur, Local purchasing, Small business, Velocity of money, Women Entrepreneur