Money and Banking - Macroeconomics- Money Supply Fell Again in Jan 2024

Money and Banking Analysis

1. Money Supply Growth Fell Again in January 2024

2. Definition of Money Supply Total amount of monetary assets available in an economy at a specific time. Includes currency in circulation and various types of deposits. Importance of Tracking Money Supply Growth Indicator of economic activity and potential future recessions. Helps policymakers and economists gauge economic health Overview of Money Supply Trends

3. Overview of Money Supply Trends Overview of Money Supply Trends Money supply growth turned negative in November 2022, first time in 28 years. Steep downward trend from high levels in past three years. Why is Money Supply Shrinking? Slowing economic activity and reduced loan issuance by banks. Contraction driven by monetary policy and economic conditions.

4. Recent Trends in Money Supply Growth Last negative growth was in 1994, lasted 15 months. Recent contraction is longest and largest since the Great Depression. November 2022 marked the first negative growth in 28 years. Continued negative for 15 months.

5. Measuring Money Supply True Money Supply (TMS) vs. M2 Developed by Rothbard and Salerno Comparison of TMS and M2 growth rates January 2024: TMS at -6.13% M2 at -1.94%

6. Economic Implications of Money Supply Changes Indicators of Economic Activity Relationship between money supply and economic booms/recessions Historical precedents: Great Depression and 1994-1996 period

7. Current Money Supply Contraction Late 2022-repeatedly contract November 1994-The last time the year-over-year (YOY) change in the money supply slipped into negative. Now:money-supply contraction is the largest we’ve seen since the Great Depression Comparison with Historical Data 13% drop since peak 12% drop during the Great Depression

8. Uneven Effects Across Economy Private sector recession vs. government sector boom Sizable increases in GDP driven by government spending & growth in government jobs Industries that benefit from government spending, liquidity not reflected overall declines Impact on liquidity in different economic sectors Sectoral Impacts

9. CPI Inflation Trends Continued rise in CPI despite money supply drop February CPI report: acceleration of inflation Implications for Consumer and Asset Prices Persistent inflationary pressures “quantitative tightening” insufficient to truly rein in the money supply or CPI inflation Inflation and Price Levels

10. Federal Reserve's Role stabilize the economy Calls for more easy money policies( calls from Wall Street and Washington) Long-Term Economic Strategies the Fed stop intervening the Fed keep pumping liquidity to the regime and its allies That would mean a return to a falling money supply and popping of economic bubbles Monetary Policy and Economic Stability

11. lays the groundwork for a real economy-not built on endless bubbles built by saving and investment artificially low interest rates and easy money Summary Persistent negative money supply growth Uneven Effects of sectoral disparities inflationary pressures