M2 increased by $201 billion in December.
This represents a 0.94% MoM increase which annualizes to 11.9%. For the entire year of 2021, M2 grew by an incredible $2.5 trillion or 13.1%!
This is extremely rapid money supply growth! The Fed can taper their asset purchases, but shrinking the Money Supply is the only way to rein in inflation.
Despite talk about a war on inflation and a quantitative easing taper, the money supply continues to expand at a rapid clip, fanning the inflationary fire.
M2 increased by $249.2B in November.
The Fed added $82 billion in Mortgage-Backed Securities (MBS) and $65 billion in Treasuries to its balance sheet while allowing $22 billion in repo agreements to roll off the balance sheet. The net gain was $126 billion in the month that the “taper” was set to begin.
So much for fighting inflation.
Despite the Fed’s announcement that quantitative easing tapering would begin this month, money supply growth appears to be accelerating.
In the latest period, M2 increased by $193 billion, eclipsing the $21 trillion mark. This represents a 0.91% month-on-month increase. That annualizes to 11.6%. This is above the six-month average indicating money supply growth is accelerating.
In the latest period, M2 increased by $163 billion and sits just shy of $21 trillion. This represents a 0.78% MoM increase which annualizes to 9.8%. This is below last month’s rise of $254B and last September’s rise of $223B.
The Fed keeps talk, talk, talking about tapering quantitative easing, but the balance sheet continues to get bigger and bigger and bigger.
The Fed balance sheet stands at $8.45 trillion, up by$115 billion from the prior month-end.
Even as the Fed talked about tightening monetary policy, the money supply grew at the fastest pace since last winter.
In the latest period, M2 increased by $263 billion. This is a major jump compared to the last two months and is the highest month-over-month growth since February. The same period in 2020 saw M2 only grow $62B.
The Fed balance sheet stands at $8.33 trillion, up $111 billion from the prior month-end.
The chart below shows how the Fed Balance sheet has grown by instrument over the last 18 months. The major surge from COVID can be clearly seen as $2.5T was added within 2 months. The monthly changes since then reflect QE on autopilot.
M2 Money Supply is measured by the Federal Reserve to calculate the amount of money in the financial system. Historically, the term inflation was defined as an expansion of the money supply that generally led to higher prices. Therefore increases in M2 is the measure of inflation. This analysis reviews the changes in money supply as a potential indication of future price increases.
M2 Money Supply is measured by the Federal Reserve to calculate the amount of Money in the financial system. The Fed defines M2 as: Seasonally adjusted M2 is constructed by summing savings deposits (before May 2020), small-denomination time deposits, and retail MMFs, each seasonally adjusted separately, and adding this result to seasonally adjusted M1.
Historically, the term inflation was defined as an expansion of the money supply that generally led to higher prices. Therefore increases in M2 is the measure of inflation. Increases in M2
