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Money is tight

Probably the biggest piece of (macro) news yesterday was the negative yoy growth of M2, the first one on the 21st century. As you can see below, the US economy had negative growth in M2 during the 1920’s and 30’s, which is not a comfortable comparison. But that’s exactly what the #fed has engineered through #ratehikes and #qe. The goal has been to reduce inflation by killing demand through liquidity tightening (M2 is money in circulation) reversing the effect of the M2 increase during the pandemic, caused by the goverment stimuli. This may be another indicator telling the fed they may have done too much too fast.

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Source: Bianco research

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