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Money Supply is a very important indicator. It helps show how tight or loose current monetary conditions are regardless of what the Fed is doing with interest rates. Even if the Fed is tight, if Money Supply is increasing, it has an inflationary effect.
Our nation’s top financier had it correct 111 years ago: “Money is gold, and nothing else.” J.P. Morgan was convinced of this. Still, government agencies have schemed over the centuries to dismantle the gold standard. Our guest commenter explains that, even though the Fed still holds gold, there was never a time when the dollar […]
Seasonally Adjusted Money Supply in May increased $131B. This is the first growth in adjusted M2 since last July and the largest increase since December 2021.
Seasonally Adjusted Money Supply in April fell $167B. As the chart below shows, this is now the 9th consecutive monthly drop. This is also the second-largest drop of all time, behind only last month.
Seasonally Adjusted Money Supply in March fell $257B. As the chart below shows, this is now the 8th consecutive monthly drop. Going back to the 1970s, the drop in March was actually the biggest on record on an absolute and relative basis.
The seasonally adjusted Money Supply in February fell $121B and the Money Supply in January was revised from positive $31B to -$142B. This is a major revision and now means the Money Supply has fallen for seven straight months.
The seasonally adjusted money supply in January increased by $31 billion. This was the first increase in the money supply in five months.
The better-than-expected non-farm payroll report for January along with the smaller interest rate hike delivered by the Federal Reserve at its February meeting increased optimism that the central bank can bring price inflation back to 2% without tanking the economy. But the shrinking money supply undercuts this soft landing narrative.
For the first time ever, the money supply contracted on an annual basis in 2022. The seasonally adjusted Money Supply in December was negative for a fifth consecutive month, coming in at -$147B. This was the largest monthly contraction in M2 going back to 1959. This type of contraction typically does not happen!
The 13-week annualized non-seasonally adjusted money supply growth rate is crashing at a time when it typically moves up. The market is becoming increasingly more vulnerable to a major event in the weeks or months ahead. Let’s take a look at the data…
