The velocity of money and its re circulation through the economy actually does occur of course, but what economists and pundits misunderstand about it is that it always and only re circulates back through as business revenue and NOT as individual income. Thus it is always expensed and reduced, and as an increase in business revenue does not immediately or in most cases at all translate into wage raises but almost entirely into overhead payments and the rest to business profits, it doesn’t increase individual incomes/purchasing power….which means it (the velocity of money) is irrelevant to modern economy’s actual and deepest problem which is that the rate of flow of total costs inherently exceeds the rate of flow of total individual incomes with which to liquidate those costs, and because the cost accounting convention that all costs must go into price is always and correctly enforced, the rate of flow of total prices exceeds total individual incomes as well. This means that modern technologically advanced economic systems even if operating without any outside intervention at all and total money was ideally distributed (which never happens) are still always cost inflationary and income deflationary.

In my experience this fact seems never to stick with economists probably mostly because they are unconscious of the costing/pricing system of commerce itself and also because almost no economists nowadays have any real knowledge of accounting let alone its exquisitely relevant subset cost accounting and its conventions. I still see Steve Keen, probably the brightest and most iconoclastic economist on the planet mentioning the velocity of money as if it was relevant to the economy’s problems. Heterodox economists, Keen included, are often heard to criticize neo-liberal economists for falsely claiming that their theories are based on good micro-foundations, and yet time after time they fail/refuse to look at the dynamically effecting micro-foundational factor of the costing/pricing system of commerce, of cost accounting’s empirical data and of its macro-economically relevant convention that all costs must go into price.