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2023-11-15 Economy

M2 Money Supply Down Significantly = Capital for Investment Drying Up

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Posted by Slenter Panda4300 2023-11-15 00:00|| E-Mail|| Front Page|| [1756 views ] Top

1 As long as banks offer 0.1% annual interests, money is going to go elsewhere. The Fed has screwed this all up.

Posted by Procopius2k 2023-11-15 07:41|| 2023-11-15 07:41|| Front Page Top

2 Deflation and disinflation are two economic terms that are often used interchangeably, but they have different meanings. Deflation is a general drop in **price levels** in an economy, which means that the **inflation rate falls below zero** and prices generally decline throughout an economy ¹. Disinflation, on the other hand, is a decrease in the **rate of inflation**. It occurs when the **inflation rate falls but remains positive**. In disinflation, prices continue to increase but at a slower rate than before ¹.

To put it simply, deflation is a situation where prices are falling, while disinflation is a situation where prices are still rising, but at a slower pace than before. Deflation can be harmful to an economy because it can cause a spiral of reduced economic activity. Central banks will fight deflation by expanding the monetary base and lowering interest rates ¹. Disinflation, on the other hand, is not harmful to the economy because the inflation rate is reduced marginally over a short-term period ¹.

I hope this helps!

Source: Conversation with Bing, 11/15/2023
(1) Understanding Deflation vs. Disinflation - Investopedia. https://www.investopedia.com/ask/answers/032415/what-difference-between-deflation-and-disinflation.asp.
(2) Disinflation vs. Deflation: Definitions and Impact On U.S. Economy .... https://www.thestreet.com/investing/the-u-s-economy-is-witnessing-disinflation-not-deflation.
(3) Difference between Disinflation and Deflation | Economics | tutor2u. https://www.tutor2u.net/economics/reference/difference-between-disinflation-and-deflation.
(4) Key Differences Between Deflation and Disinflation - The Balance. https://www.thebalancemoney.com/the-difference-between-deflation-and-disinflation-416888.

Posted by M. Murcek 2023-11-15 07:50|| 2023-11-15 07:50|| Front Page Top

3 To wit, in DC, an decrease in the rate of increase in spending is a "cut."

Got it?

Posted by M. Murcek 2023-11-15 07:53|| 2023-11-15 07:53|| Front Page Top

4 In the curent economic climate, the natural tendency is to keep your money in your pocket.

Posted by ed in texas 2023-11-15 08:40|| 2023-11-15 08:40|| Front Page Top

5 For some of this, it has been baked into the equation for a very long time. The boomers and their 401ks and such were the biggest supply of investment capital. Well, they retired with the largest chunk happening during 2021-2022 and when that happens the investment portfolio is liquidated and turned into bonds and other safe investments for retirement. We are no longer in the era of cheep capital.

What is left is being sucked into the building up of infrastructure for things the US needs as we are decoupling from China and that makes things inflationary.

On top of that, with Biden's horrible mismanagement of the economy and energy has caused more inflation on people that would normally invest and they aren't adding to the money supply in any real meaningful way.

Which means you have the perfect storm of 13% interest rates with 7% inflation and a deflation of your actual wealth for the next decade.

Posted by DarthVader 2023-11-15 09:10|| 2023-11-15 09:10|| Front Page Top

6 The Fed has screwed this all up.

Banking regulator with ‘party culture' rife with sexual harassment complaints, strip club invites: report

AND Biden is giving away billions.

Posted by Skidmark 2023-11-15 09:41|| 2023-11-15 09:41|| Front Page Top

7 'Death Cross' spooks traders despite stocks soaring on cooling inflation: Dow's 50-day average drops below the 200-day line in grim chart pattern that signals a looming crash

Death Cross Definition: How and When It Happens

Posted by Skidmark 2023-11-15 09:48|| 2023-11-15 09:48|| Front Page Top

8 Yes, M2 is going down, and yes, normally this would dry up capital and normally cause a recession.

However, these are not normal times. The decline in M2 should be viewed against the backdrop of the explosion of M2 in 2020, which is still out there.

What we are seeing is that someone is using a pail rather than a teaspoon to try to bail out the Pacific Ocean. But it's still the Pacific Ocean.

Posted by Tom 2023-11-15 11:30|| 2023-11-15 11:30|| Front Page Top

9 #3 Baseline budgeting. Don't try this at home kids.

Posted by Rex Mundi 2023-11-15 12:56|| 2023-11-15 12:56|| Front Page Top

10 Tom

good analogy

M2 was 8T in 2008 rose to 16T by 2020 then to 21.6T in mid 2022 and is now down to about 20.8T

Posted by lord garth 2023-11-15 15:13|| 2023-11-15 15:13|| Front Page Top

11 Ya know, I told people that when the boomers retired, and that pool of money started draining, the investment bidness was gonna suck.
And here we are.

Posted by ed in texas 2023-11-15 15:18|| 2023-11-15 15:18|| Front Page Top

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