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M1 Money Stock

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WILL THE MONEY SUPPLY REALLY COME DOWN? Yes, it is possible that the total money supply will decrease. = The total money supply in an economy is affected by various factors such as monetary policy, banking system dynamics, and economic conditions. Here are some scenarios in which the total money supply may decrease: CONTRACTIONIST MONETARY POLICY Central banks have the ability to control the money supply through their monetary policies. When they pursue contractionary monetary policy, they take steps to reduce the money supply in order to control inflation. This can include selling government securities, increasing reserve requirements for banks, or raising interest rates, which can lead to a decrease in the money supply. BANK CRASHES OR BANK RUNS When multiple banks fail or experience a bank run, it can lead to a decrease in the money supply. When banks fail, the money that customers have deposited in those banks may be lost, resulting in a decrease in the overall money supply. ECONOMIC DOWNTURN During economic downturns, such as recessions or depressions, businesses and individuals may reduce their borrowing and spending, leading to a decline in the demand for credit and money. As a result, the supply of money may shrink. CONTRACTION OF CASH OR DEMONETIZATION Governments may withdraw certain denominations of cash from circulation or demonetize them altogether. This can be done for a variety of reasons, including combating counterfeiting, promoting digital payments, or curbing black market activity. In such cases, the total money supply would decrease as the currency withdrawn from circulation became invalid. DEVALUATION OR DEFLATION When there is a significant decline in the value of a country's currency (devaluation) or a sustained decline in the general level of prices for goods and services (deflation), the total money supply can effectively decline in terms of its purchasing power. While these scenarios can lead to a decline in the total money supply, it is important to note that in modern economies, the money supply is generally controlled by central banks, which strive to maintain stable and predictable monetary conditions to promote economic growth and stability. A significant and prolonged contraction in the money supply can have a detrimental effect on economic activity, so central banks generally seek to avoid abrupt contractions in the money supply. If this idea and explanation have added value to you, I would appreciate a COMMENT or BOOST very much. Thank you, and happy trading!
FRED:WM1NSEducation
by ZielIstDieAutarkie
Inflation made simple: More money More problmesOn March/April 2020 we hit irrational market conditions due to the abrupt halt in the economy. We can blame the pandemic as the trigger, however there were indicators that were already flashing a slow down in the economy. Then "Magically" the so called "V Recovery". Sharp, strong, "back to normal", unemployment spiked to unprecedented levels and went back to a fast recovery. A while ago I published an article about the disconnection between the economy and the stock market. Several articles pointed out the inflation issue, at the time it looked like something that was neglected and even ignored. The Fed called it a "transitory" inflation. The Fed is responsible for watching over inflation and employment. This Fed has disregarded the inflation issue. Magic doesn't simply occur. After the economy stalled due to the virus lock down, the oil tumbled, the stock market wiped off the gains and took it back to 2016 levels, the unemployment spiked, and there were two emergency calls, one to put interest rates to Zero, and the second to increase the debt ceiling to unprecedented levels. We have two main factors to eye, the near Zero interest rates, plus the M1 metric (Money supply) spiking like never before. This means TONS and TONS of bill notes were freshly printed and put out in the market. It is not new to know that the ships at the California ports and the supply chain disruption contributed to inflationary pressures, but they were not the root reason for the 7% inflation we're seeing now, those were more the excuses to divert the attention from the root problem, we have an excessive amount of free money in the market, a Piñata was broken and everybody have cheap mortgages, cheap credit, cheap margin, cheap everything. Supply/Demand in action, a lot of easy money plus a lot of buyers => increase of prices. A lot of bills in the market dilute their value, so now we need more bills to buy the same stuff this equals to inflation, and after these levels shown in the M1 + Interest rates charts, it means a lot of it. Now the FED has changed the tone and it doesn't call it "transitory". They say they will increase the interest rates in 2022, but so far the things are just exactly the same, nothing has changed. The market doesn't understand intentions, it understands numbers. SPX : The index has made fresh all time highs and it's in an uptrend, weakening momentum, but I wouldn't be too worried about it. The market needs a correction to buy cheaper, so this is normal to be expected at some point. As long as things are kept the same I would expect to see the 21st century version of the "Roaring 20's" US30Y : It made a rally from July 2020 to April 2021, then it started to make LL-LH. Something that has to be paid attention to. VIX : The fear indicator is around 17, which signals a bull market. A couple of spikes which showed up during the weeks when the market was testing the trend and the market continued to "buy the dip". DXY : The Dollar index went down after the flood of dollars put out in the market, it tested its lowest at 90 and it went back up to 95. GOLD: Gold is a hedge for inflation. In 2016 it found a support level a little above 1000. Since then it started a rally that took it to 2000. The market was already forecasting some troubles in the economy and when the pandemic hit harder it was when gold took its last rally to 2000. Once the dust was settled it just started to consolidate between 1700 ad 1800. This market is in a wait and see pattern. Cryptos are being eyed as the virtual Gold but still they are in a roller coaster with high volatility, not for the faint at heart. OIL. This is a fundamental economy indicator. The pandemic made the future market participant pay up to 40 to get rid of the contracts, unprecedented. After that historic milestone oil started a recovery rally that followed the "V Shaped" recovery, and it went from a closing 17 level to the 80's level we see today. The pace at which it's been growing has decelerated lately, so basically it is in an uptrend with lower momentum. The economy is reaching an equilibrium where the demand for energy is not the same as the amount needed to jump start the economy. Oil is still making HH-HL, until that changes it's still in an uptrend. Conclusion: Nobody wants the party to be over, so we keep on adding more to it. However this has taken us to the irrational exuberance where the economic indicators already show signs of high levels of stress. A problem has been created, and apparently it will be left alone until it explodes, just like it has happened in the past. There are two ways to deleverage the economy the easy way and the hard way, the longer it takes the Fed to start increasing interest rates, the bigger the problem will become. The housing market is very hot, the used car market, the credits, the spending in general accelerated too much. We risk to see another 2008 when the interest rates will start to go higher and will catch the general public with a lot of debt ... and higher prices. A very good economy educational video that's one of my favorites is from Ray Dalio, and it explains in a very simple and understandable language the economic cycles. I strongly recommend you to watch it. How The Economic Machine Works by Ray Dalio
Editors' picks
FRED:WM1NSEducation
by Madrid
74
Hellishly Bullish ChartThe USA Feds printing press or credit supply machine of money supply is an incredible chart... wish I could have been long on that one!!! Like looking at BTC on a 1W chart that thing mooned hard! But like BTC we know it rockets up but also it returns to its mean.. usually an 80% drop from ATH. I'm not saying the money supply will be cut by 80% but with such an stratospheric rise in money supply there must be some sort of come down? The Fed says that the inflation data we recently had is transitory but I question their ability to control it looking at the M1 chart. They have possibly created a monster bigger than there own self's!! I think this year is setting the scene.. some analyst's are saying Gold to $5000US per Oz that's pretty crazy but so is the M1 chart.. That's a sht ton of money added in 1yr it and Has to have massive repercussions! The law of karma says for every action there is an opposite and equal reaction so possibly in the coming years .. not to far away $5000 Gold per Oz or BTC to 500k isn't all that crazy. The good thing and advantage we have as traders is our perspective on the market.. keep an eye out for Higher High's - Higher Lows on Daily's and Weekly's ..Break out's of long term trends and get your self positioned and ready for something incredible. All the best!!
FRED:WM1NSShort
by Neilsh
M1- 🧂Salt-N-Pepa🌶️ 'Let's Talk About Money maybe?'' 💃🏾👯‍♀️First of all, analysis tends to get better with some music in the background . News today: ''Wall Street's main indexes opened lower on Wednesday after stronger-than-expected inflation data fueled fears of tighter monetary policy to combat possibly a longer period of inflation .'' Ok Federal Reserve , Let's talk about You and Me, let's talk about Money Printing maybe? AND THEN SONG GOES LIKE THIS: ''Let's tell it how it is, and how it could be How it was, and of course, how it should be Those who think it's dirty, have a choice Pick up the needle, press pause, or turn the radio off Will that stop us, Pep? I doubt it All right then, come on, PRINT!!! '' ps. not sure what M1 is? Let this guy explain it perfectly on YouTube ps2: printing money brings inflation the FXPROFESSOR
FRED:WM1NSLong
by FX_Professor
2
MONEY SUPPLY AND VELOCITY NEED TO WORK TOGETHER TO GET INFLATION Inflation rate timeline because TradingViews does not have this data. Feel free to verify on your end and let me know what you think. ------ Inflation Rate: 1972, 3.27% increases to 1981, 13.55% Inflation Rate: 1986, 1.90% increases to 1990, 5.40% Inflation Rate Peaks in 2008 at 3.84% M1 and M2V both rise in 2009 - 2011, Inflation Rate increases from -0.36% to 3.16%. -------- Inflation is still very possible but we need to see M1 and M2V work in unison. We see in 2009 to 2011 M1 and M2V both go up and Inflation follows. The theory behind this is: Inflation cannot occur if Money does not get transferred from M1 to the real economy to affect prices of production and consumption. Part of the problem is that the 1% are taking in a very large majority of that M1 money supply. The 99% of people who actually spend money are never given access to the money that is created. It is being hodled by banks who, think it is too risky to lend. In Venezuela, the velocity is very high because people need to spend their money before it gets devalued, in the US we see people saving... NO INFLATION UNTIL DEMAND RETURNS, ONCE DEMAND RETURNS , INFLATION WILL COME BACK WITH A VENGENCE. if you believe the cpi, m2v, m1 and other data provided by the US government is false then, what data is correct? and whats the difference.
FRED:WM1NS
by arama-nuggetrouble
4
Correlation between M1 and M2There are lot's of people claiming that an expansion of the balance sheet (M1) does not lead to an inflation of the monetary supply (M2) since the additional reserves created by the Fed can't be spent by the primary banks that receive them. This fails to account for the fact that the financial institutions that sold the bonds to the primary banks (who in turn sold them to the Fed) did receive spendable currency, and that there are less debt instruments on the market after the purchase than before, creating the space for companies to issue further debt. This chart demonstrates that a significant correlation between the two does in fact exist.
FRED:WM1NS
by dlexc