From Wikipedia:

The velocity of money (also called velocity of circulation) is the average frequency with which a unit of money is spent in a specific period of time. Velocity associates the amount of economic activity associated with a given money supply...In the equation of exchange, velocity of money is one of the variables claimed to determine inflation.

This is a topic I have spoken about in the past. Over the past few years it is taking an increasing amount of outstanding debt and new debt to generate a given amount of Gross Domestic Product.

Despite the massive amount of money being printed by the various World Governments, the actual trend in prices overseas is deflationary. If inflation was actually present in the system, the huge blow-outs in Money Supply would be inflationary, and possibly hyper-inflationary. M3 Money Supply is defined as currency in the system plus current and term deposits. As at March 2010, according to the RBA, M3 amounts to $1,200 Billion. Gross Domestic Product is currently $1,260 Billion. Money Supply (M3) therefore has flowed around the system 1.05 times. The chart demonstrates that over the last decade, the Velocity of Money has consistently fallen from 1.55 times to the current low level. The current Velocity is not consistent with inflationary expectations. In this regard, Europe's and US Monetary policy of zero interest rates are consistent with the immediate deflationary pressures, and is why to date the large scale money printing has not proven inflationary. But nothing lasts forever, and if money supply continues to grow inflation will be inevitable. As usual, the only question is when.