@Rage,
Excellent response. Couldn't disagree with anything you have written.
Sorry about the late reply,
@pmaitra.
Thank you for taking the time to respond and explain so nicely. I am honoured.
To nitpick, money is not wealth. The two are distinct in economics, but often conflated in common parlance.
You are correct. When I said money, and I should have clarified, I used money as in real money, where it is backed by some precious metal. Of course, the definition of money varies from economist to economist. Those who swear by gold or silver backed promissory notes, will not agree to that definition of money, but going by the majority of the world, you are correct in how you represent money.
However, if changes in wealth (real currency) vs income (nominal GDP- from the income side- proxied and inflated from QE) are important in determining the decline in U.S. money velocity since 1981, then: wealth must have risen relative to current income, during that period.
Wealth has probably risen relative to the current income, and I believe that is true. However, if you take into account the internally and externally held debts, Congressional pressure for 'easy' loans (housing bubble), selling of government bonds (since Andrew Jackson), and departure from resource backed currency (1963), I would argue that per capita wealth has diminished.