- The Fed Is About To Go Weimar: Gold And Silver Will Soar
by Dave Kranzler, https://investmentresearchdynamics.com/
Note: I learned of the Fed’s redefinition of M1 from the invaluable research of John Williams at Shadowstats.com – This information was not reported by any mainstream financial news sources.
The Federal Reserve quietly announced on December 17, 2020 that it is redefining the M1 and M2 Money Supply Measures (H.6 Release) by shifting the savings deposits component into M1 from M2. M1 is supposed to measure “demand money” – i.e. funds that can be accessed for use without prior notice, primarily checking account funds, including travelers checks and free-floating currency. M2 is M1 plus “term” deposits: savings accounts, CD’s in amounts of less than $100k and retail money market funds.
This chart below, sourced from Alasdair Macleod’s must-read “The Next Dollar Problem Has Just Arrived,” shows the vertical move in the M1 aggregate since the end of 2019: (top of post)
The graphic above was prepared before the Fed announced its redefinition of M1. The jump in M1 was primarily the result of a huge shift in funds from term/savings accounts into demand deposits. It’s a flight to safety of sorts in that depositors have shifted a unprecedented amount of funds from “term” deposits at banks into “demand” deposits. In a sense, it’s a low-grade “run on the banks.”