ACTV - M2 Money Grew At Annual 8% Compound Rate Since March 2020
2024-03-28 22:03:34 ET
Summary
- M2 money stock has been declining since spring 2022, but over the past four years it has shown a massive amount of growth.
- Long-term growth of M2 money stock is historically large at a compound 8.0% annually, despite recent declines.
- Money seems to have gone into the financial sector rather than into the purchase of real goods and services, and, as a consequence, its velocity of circulation has declined.
- The velocity of circulation of the M2 money stock has risen modestly in recent months, but still remains at very low levels.
- Whether or not the velocity of the money stock increases further is unknown.
The M2 money stock has been declining now since the spring of 2022. The Federal Reserve has been in a quantitative tightening mode since March 2022.
This chart captures the picture of that decline.
M2 Money Stock (Federal Reserve)
A lot of people are concerned about this decline and what it might mean for the health of the economy in the near future....
M2 Money Grew At Annual 8% Compound Rate Since March 2020