COVID economic policy was unprecedented. M2 grew faster than ever, now it is falling. Yet, in March, M2 was still up $5.4 trillion from pre-COVID levels. For comparison, GDP (total spending including inflation) is up $4.9 trillion during that same time period. Here’s the bazillion dollar question: Is there still $500 billion of extra money remaining that can boost spending, and will it keep doing so until it is either spent, absorbed by inflation, or mostly removed? If so, then growth and inflation won’t decline as rapidly as M2 growth has. In other words, maybe, just maybe, we put so much money into the system during COVID that it is still holding growth up. I still think recession is likely this year, but if wrong, it will be because of that bulge in cash hanging around.
COVID economic policy was unprecedented. M2 grew faster than ever, now it is falling. Yet, in March, M2 was still up $5.4 trillion from pre-COVID levels. For comparison, GDP (total spending including inflation) is up $4.9 trillion during that same time period. Here’s the bazillion dollar question: Is there still $500 billion of extra money remaining that can boost spending, and will it keep doing so until it is either spent, absorbed by inflation, or mostly removed? If so, then growth and inflation won’t decline as rapidly as M2 growth has. In other words, maybe, just maybe, we put so much money into the system during COVID that it is still holding growth up. I still think recession is likely this year, but if wrong, it will be because of that bulge in cash hanging around.
@SS_strength when are the new SS episodes added to the subscriber site? I saw the clips for 199 on YouTube but don’t see them on the site after I login. Thanks