ACTV - Hoisington Investment Management Q2 2024 Review And Outlook

2024-07-24 23:00:00 ET

Summary

• The sharp deceleration in detrended real M2 money supply growth, a fundamental cause of aggregate economic fluctuations, is a stark reminder of the past.
• The Fed has the tools to reverse the monetary restraint, but the process will prove painstakingly slow.
• The last four years also point to the harm caused by such massive swings in monetary growth.
• These lessons from the past, particularly theconsequences of extreme monetary policies,provide invaluable insight into understandingthe causes of business cycles and their attachedbut leading financial cycle.

Monetary and Fiscal Extremes

Amidst a widespread deterioration in the economic landscape, it is crucial to underscore the current detrimental roles of monetary and fiscal policy. The sharp deceleration in detrended real M2 money supply growth, a fundamental cause of aggregate economic fluctuations, is a stark reminder of the past. Prior to nine of the ten recessions since the early 1950s through the start of the Pandemic, monetary restraint has consistently reduced inflation, economic activity, and short- and long-term bond yields....

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