Wanna know about the current trends in the economy? One thing is the M2 money supply from the St Louis Fed. Here it is, going back to the end of the 1970s.
But let’s just look at M2 since 2019. You can see that, since 2020, there has been a lot of action on the money front. And I don’t like it.
So, in the Fall of 2019 M2 was about $15 trillion. Then, with COVID, M2 money supply increased about $3 trillion in the five months between March 1, 2020 and August 1, 2020. Then in the 15 months between August 1, 2020 and January 1, 2022, M2 money supply increased by another $3.5 trillion to $21.7 trillion.
But since January 1, 2022, the M2 money supply has been basically flat, at $21.7 trillion, or so.
The interesting thing, to me, is that, for the first three months of the year, while M2 stayed constant, interest rates were about zero.
And then since May 2022, the Fed has increased interest rates to 2.30% to 2.50%. And the M2 money supply has stayed constant.
What does that mean? I really don’t know. Because I thought that if you want to curb money supply growth, then you raise interest rates and then the money supply slows down, in that order.
So what is going on?
I don’t know.
What happens next?
I don’t know.
Does the Federal Reserve Board know what it is doing?
I don’t know.
And that ain’t good.