The Historic Decline in U.S. Money Supply Signals a Recession, According to This Economist
U.S money supply exploded during the pandemic as the government doled out trillions of dollars in stimulus. Those payments helped keep the economy afloat during a difficult time, but many economists believe they also contributed to the fierce inflation that followed. In any case, the Federal Reserve responded by tightening credit conditions at a velocity not seen since the early 1980s, and U.S. money supply is now falling at a historic rate.
Esteemed economist Steve Hanke sees that as a big problem. He recently said, "The money supply is falling like a stone, and is currently contracting at a minus 3.7% annual rate, something we have not seen since 1938." He believes the situation will culminate in a recession during the first half of 2024. But that opinion runs contrary to what the Fed is saying.
Here's what investors should know.
Source Fool.com
