23.6% of All US Dollars Were Created in the Last Year

Mish

Money supply is on a surge. Several charts tell the story.

Money Supply Up Over $3 Trillion Since March

Money Supply Up Over $3 Trillion Since March 2020-09-28

Greatest Year-Over-Year Money Supply Surge in History 

Greatest Year-Over-Year Money Supply Surge in History 2020-09-28
Comments (48)
No. 1-19
Sechel
Sechel

if V = GDP / m2(your choice) that tells me velocity of money is way down. So what is that telling us ? Deflation or a weakening economy? I'm not sure what the Fed is hoping to accomplish here. Those dollars aren't being spent, If they are trying to further destory purchasing power it doesn't appear as i they're having much effect. Stock market keeps going up though. Maybe they want a minsky bubble. We konw the Fed's been buying massive amounts of Tresauries keeping interest rates low

PecuniaNonOlet
PecuniaNonOlet

Uncle Sam could send me $10k in cash to spend how I want but there is nothing to spend it on. Yeah I can buy a new tv but I already have 5 and there are only 2 people in my house. Travel? Where to?

Buy clothes? What for, nowhere to go.
Food? I can only eat so much.

Buy a new car? What for, i work from home now and nowhere to go.

I could go on but you get the idea. Paying down debt is what people have been doing.

borderdenizen
borderdenizen

You could take up the trombone?

Insightful post, though.

Jojo
Jojo

Money for nothing and chicks for free?

Future Saviour or False Prophet?
Economics - Global
Modern Monetary Theory (MMT) examined

KidHorn
KidHorn

Where did the money end up? Ultimately it must have ended up in banks. Unless people are hoarding bills.

Eddie_T
Eddie_T

Breathtaking, isn't it? It's a bold experiment we're conducting...and we all know (except for maybe Paul Krugman) that it can't end well..

But whaddya do? Reject capitalism and turn into a commie? I don't see that working out well.

Give away your worldly goods and enter a holy order or a Buddhist monastery or something?

My plan is to keep working so I can deal with inflation....and to buy tangible assets.

Open to other good suggestions.

Paying down debt will probably be easier when the currency is completely worthless, so paying down secured debt now ahead of schedule seems fairly wrong to me...other than the worst class of debt....like credit cards that charge high interest....No real reason to pay off mortgages on assets that are rising rapidly in dollar value.

randocalrissian
randocalrissian

Allowing for me being dense, isn't the money supply up 23.6% and total money supply in existence created this year is 16.5%? Take end value 18 TT subtract start value to get change of 3.08544 TT divided into ending value is 16.541394%. Allowing for density.

16.5% would still be a tremendously high print, one sixth of fiat in existence is brand new. What could possibly go wrong?

Sechel
Sechel

Seems all this money is just going into the stock market and not much else. The Fed doesn't seem to shoot very straight

dr smock
dr smock
This is the only thing I know of to explain the massive US inflation going on, but what is the fed going to do? If they print more, then south america here we come since the dollar as the world's reserve currency is hanging by a thread. Be careful because when you corner a rat, he will bite you!!!!!!!!!!!   
 Three years ago, Michigan State Economics Professor Mark Skidmore revealed there was $21 trillion in what he calls “Missing Money” from the Department of Defense (DOD) and Housing and Urban Development (HUD). This was a stunning revelation and the biggest auditing discovery in the history of accounting, but now this revelation comes in second with Dr. Skidmore’s latest update to the “Missing Money” question which is now the biggest in history by a long shot. Skidmore’s research reveals the US Treasury market is rolling over $90 trillion to support the official debt of $22 trillion (2019). Why do you need to churn $90 trillion in debt? Is the US debt really $90 trillion? Skidmore says, “It’s not that we are moving to short term debt that would need more turn over. That’s not it. The only other explanation I can come up with is that the federal government, the Treasury, is supporting more debt with the reissuance than is officially recognized. I am floating this around and asking people to have a look at this and tell me if there is some other possible explanation. I don’t know of one. . . . This is a discrepancy. Why do we have $22 trillion in debt, but $90 trillion in reissuance?”

silverdog148
silverdog148

Interesting, they are trying to increase the velocity of money, but it's not working and it's flowing into the stock market/financial products/etc. Everything has been monetized and frankly what else really is there to consume? A new iPhone, a new big screen TV, blah, blah.

This is actually increasing inequality which I don't believe they want give the appearance of. What do I want? Increased health, increased well being, increased time to pursue hobbies, etc. All of which can be achieved without buying more plastic products.

Carl_R
Carl_R

So far they pumped the money in, and it offset the fall in velocity. What happens when the velocity drifts back towards historical levels? Can the Fed withdraw it fast enough? Will they withdraw it at all?

Rocky Raccoon
Rocky Raccoon

Donald Trump may win the title of ultimate Keynesian POTUS. He does want a legacy.

Sucks for Americans who actually save their money and are responsible. Sucks for Americans with 401Ks as their dollars they think they are winning with as they fall for Trump's rhetoric don't go nearly as far.

Nickelodeon
Nickelodeon

I'm sure none of that money made it into the stock market. I wonder if Robinhooder's know what the price to earnings ratio of any of their held stocks is...or even care.

Augustthegreat
Augustthegreat

Most of those newly created money ends up into the pockets of the top 5% percentile. American capitalism is really wonderful, if you are in that 5% group.

RonJ
RonJ

"23.6% of All US Dollars Were Created in the Last Year"
"And the BLS says inflation is only 1.4%"

The FED could double the number of dollars in one year and if they buried them in a hole in the ground, it wouldn't change anything.

Martin Armstrong: "The ECB can cut rates to try to stimulate and that failed. People are hoarding cash in Europe and that creates deflation."

amigator
amigator

You have not seen anything yet... Wait til the next crisis you will probably be able to say 80% of all the dollars created occurred within the last 10 months!

nzyank
nzyank

If US doesn't have coherent fiscal policy due to Trump/Republican failed policies & politics, then all that is left is monetary policy, which is an inadequate tool for the job at hand.