4 ms·

It's hard for people to have less money to spend when there's 5x as much M1 [1], and 32% more M2 [2], and for the entirety of the last year - the personal savin

It's hard for people to have less money to spend when there's 5x as much M1 [1], and 32% more M2 [2], and for the entirety of the last year - the personal savings rate was at an all time high [3]. People have more money now than ever before. I wouldn't expect a reduction in commerce in aggregate because ~3% of the workforce quit temporarily or even permanently. I won't be surprised if inflation gets so high that there's a reduction real terms. But that hasn't happened yet. [1] https://fred.stlouisfed.org/series/M1SL https://fred.stlouisfed.org/series/M1SL [2] https://fred.stlouisfed.org/series/M2SL https://fred.stlouisfed.org/series/M2SL [3] https://fred.stlouisfed.org/series/PSAVERT https://fred.stlouisfed.org/series/PSAVERT

mahogany 5y ago
How did the M1 supply increase $12+ trillion? That's surprising to me, especially when it doesn't include bank reserves, and anyway it's much more than even the total amount of quantitative easing from what I can tell.
- onlyrealcuzzo 5y ago
  The Fed's balance sheet increased by $4T. Federal deficit was $3.1T Bank lending for mortgage originations increases M1 - this increased by over $1T. Total = $8.1T Since the Fed bought most of the government's debt, though, a lot of that $3.1T government deficit should be included in the $4T balance sheet increase of the Fed. So this could possibly only account for half of it. I'm not sure. Other personal debt (which includes auto loans) isn't even up another $1T. Margin debt in stocks is up $260Bn. Anyone else know what the rest is?
- mywittyname 5y ago
  TL;DR: the federal reserve board did away with a requirement on the classification of certain bank accounts, causing savings accounts and checking accounts to be reported as the same. https://fredblog.stlouisfed.org/2021/01/whats-behind-the-recent-surge-in-the-m1-money-supply/ https://fredblog.stlouisfed.org/2021/01/whats-behind-the-rec... > In any case, it seems that the modification of Regulation D in late April has effectively rendered savings accounts almost indistinguishable from checking accounts from the perspective of depositors and banks. Accordingly, the composition of M2 between M1 and non-M1 components conveys little economic information.

mahogany 5y ago

How did the M1 supply increase $12+ trillion? That's surprising to me, especially when it doesn't include bank reserves, and anyway it's much more than even the total amount of quantitative easing from what I can tell.

onlyrealcuzzo 5y ago
The Fed's balance sheet increased by $4T. Federal deficit was $3.1T Bank lending for mortgage originations increases M1 - this increased by over $1T. Total = $8.1T Since the Fed bought most of the government's debt, though, a lot of that $3.1T government deficit should be included in the $4T balance sheet increase of the Fed. So this could possibly only account for half of it. I'm not sure. Other personal debt (which includes auto loans) isn't even up another $1T. Margin debt in stocks is up $260Bn. Anyone else know what the rest is?
mywittyname 5y ago
TL;DR: the federal reserve board did away with a requirement on the classification of certain bank accounts, causing savings accounts and checking accounts to be reported as the same. https://fredblog.stlouisfed.org/2021/01/whats-behind-the-recent-surge-in-the-m1-money-supply/ https://fredblog.stlouisfed.org/2021/01/whats-behind-the-rec... > In any case, it seems that the modification of Regulation D in late April has effectively rendered savings accounts almost indistinguishable from checking accounts from the perspective of depositors and banks. Accordingly, the composition of M2 between M1 and non-M1 components conveys little economic information.