Contracting Money Supply Signals Major Recession Warning

by | Feb 2, 2024 | Recession News | 15 comments

Contracting Money Supply Signals Major Recession Warning





Money Supply is CONTRACTING (Major Recession Warning)

The recent contraction in the money supply has sent shockwaves through the financial markets, sparking fears of an imminent major recession. The contraction, which has been ongoing for several months, has raised concerns among economists and policymakers about the health of the economy and the potential for a severe downturn.

The money supply refers to the total amount of money in circulation in an economy, including cash, demand deposits, and various forms of liquid assets. It plays a crucial role in determining the level of economic activity and is closely monitored by central banks and policymakers as an indicator of the health of the economy.

In recent months, however, the money supply has been steadily contracting, with a decrease in the availability of credit and a decline in the overall liquidity of the financial system. This has raised significant concerns about the potential for a severe economic downturn, as a contracting money supply can lead to a decrease in consumer spending, a slowdown in business investment, and an overall weakening of economic activity.

The contraction in the money supply can be attributed to a variety of factors, including a tightening of monetary policy by central banks, a decrease in the availability of credit from financial institutions, and a decrease in the velocity of money as individuals and businesses become more cautious in their spending and investment decisions.

The implications of a contracting money supply are far-reaching and can have a significant impact on the overall health of the economy. A decrease in the money supply can lead to a decrease in aggregate demand, which can in turn lead to a decrease in production, employment, and income. This can create a self-reinforcing cycle of economic decline, leading to a major recession and potentially a financial crisis.

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Policymakers and central banks are closely monitoring the situation and are considering various measures to address the contraction in the money supply. These measures may include reducing interest rates, increasing the availability of credit, and implementing various forms of monetary stimulus to boost the overall liquidity of the financial system.

In the meantime, investors and businesses are bracing for the potential impact of a contracting money supply on their finances and economic prospects. Many are taking precautionary measures to mitigate the potential risks, such as increasing their cash reserves, reducing their exposure to risky assets, and tightening their overall financial position.

The contraction in the money supply is a clear warning sign of potential trouble ahead and underscores the need for vigilance and proactive measures to address the potential risks to the economy. It is crucial for policymakers, businesses, and consumers to closely monitor the situation and take appropriate steps to mitigate the potential impact of a major recession. The coming months will be critical in determining the trajectory of the economy and the potential for a severe downturn.


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15 Comments

  1. @VOLightPortal

    It's an interesting hypothesis based on correlation of two variables. Let's put it to the test and see if it holds true with a sample size greater than 30 to be statistically significant.

  2. @forposterity4031

    only way to combat inflation effectively.

  3. @parthenonx2697

    I mean, greed is fueling the whole thing asking side the money hoarders so what else do you expect?

  4. @chieftech714

    evrery day I hear some white guy screaming about how the sky is falling.. I'm so sick of them. STFU and help out

  5. @Charlie-bi5kx

    Quantitative tightening is theft by taxation

  6. @caseydickson1029

    Show full M2 money supply growth / contraction since 2019 for a more realistic view instead of YoY. You will see the recent contraction is just a blip.

  7. @Ultimate_sir

    M2 supply also grew at a rate never before seen during COVID, so it’s probably a good thing the m2 supply is shrinking to make up for the money printing during COVID.

  8. @ewetoobblowzdogg8410

    The best thing that could ever happen to this country would be for a complete implosion of the dollar, the collapse of our corrupt stock market and the mass closing of all the global corps.

  9. @keithanderson6166

    Translation: Fools not buying shit they don't need and can't afford.

  10. @jeffkadlec8264

    The money supply expanded STUPIDLY during the Pandemic. This contraction is a good thing.

    You twit.

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