WARNING: the Money Supply is officially contracting. 📉
This has only happened 4 previous times in last 150 years.
Each time a Depression with double-digit unemployment rates followed. 😬 pic.twitter.com/j3FE532oac
— Nick Gerli (@nickgerli1) March 8, 2023
- U.S. Money Supply CONTRACTING; Down 3.69% and Falling
by Hal Turner, https://halturnerradioshow.com/
In the past 150 years, the US Money Supply has only contracted five (5) times; and they were Recessions and the Great Depression. It is happening again.
Two U.S. money supply metrics that investors tend to pay close attention to are M1 and M2. The former accounts for the cash and coins in circulation, as well as the demand deposits within an individual’s checking account. Meanwhile, M2 factors in everything in M1 and adds money market accounts, savings accounts, and certificates of deposit (CDs) below $100,000. The main difference is that M2 factors in cash that takes a little extra work to get your hands on.
For as far back as the eye can see, M2 has been climbing. Since the U.S. economy steadily grows over the long run, it’s only natural that more cash/capital is needed to facilitate transactions. In fact, M2 rising is so common that some economists may not even be paying attention to it as a monthly reported datapoint.
But in the rare event that M2 meaningfully declines, pay attention!
Back in March, Reventure Consulting CEO Nick Gerli posted what you see below on X, the social media platform formerly known as Twitter. It highlights M2 money supply growth and contraction dating back to 1870 using data supplied by the St. Louis Federal Reserve and the U.S. Census Bureau.
Over the past 153 years, there have only been five instances where M2 has declined by at least 2% on a year-over-year basis: the 1870s, 1893, 1921, 1931-1933, and 2023. In order, these instances resulted in a depression, panic, depression, Great Depression, and (insert your best guess here). In the previous four instances, it was an ominous sign for Wall Street.