M2 Money Supply Shrinks
Published | Written by Dan Price
Recently, the M2 money supply in the United States has made headlines due to a contraction in January 2022. This marks the first contraction since 1958 and the highest year-over-year contraction in almost 100 years.
The M2 money supply is an important indicator of the overall health of the economy. It represents the amount of money in circulation, including both physical currency and less liquid assets such as savings accounts. A contraction in the M2 money supply can indicate a decrease in economic activity, as there is less money available for businesses and consumers to spend.
The contraction in January 2022 may have been caused by a variety of factors, including reduced government stimulus spending and a decrease in consumer spending.
When the Money Supply Contracts?, banks start collapsing.?
— Nick Gerli (@nickgerli1) March 13, 2023
This trend is very predictable. Each time the money supply has contracted in last 150 years, we've had a banking crisis.
M2 Money is down -2% YoY. First time in 100 years. Take note. pic.twitter.com/LC5vBHHwJs
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