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Recession Risk Grows After Money Supply Shrinks At Fastest Pace Since Great Depression

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Even a juvenile can recognize that the United States is in financial peril as the realization of Democrat Joe Biden’s Marxist utopia occurs.

“Let me speak as if to a child…when M2 (money supply) year over year growth goes negative historically bad things happen…like financial panics. It happened in November 2022. It’s not a market timing tool but a clear warning that one should be seriously considering cash (money markets, t-bills etc) as a part of their asset allocation until the uncertainty clarifies. IMHO we are nowhere near clarity yet. Clarity for me is lower prices reflecting reality,” Edward Dowd wrote on Twitter, hoping to make a confusing situation more clear for us.

This is the mess that Biden and the Democrats have caused and they are going to cause historic suffering for Americans.

From the fall of 1930 through the winter of 1933, the money supply in the United States fell by nearly 30 percent. The declining supply of funds reduced average prices by an equivalent amount at a time in history known as the Great Depression.

“Money supply has now been shrinking year-on-year since December, an unprecedented development in modern times that should make investors sit up and take notice – growth, asset prices and inflation could all weaken,” Reuters reported in March of 2023.

According to media headlines, this is the current situation.

After money supply shrinks at the fastest rate since the Great Depression, the risk of recession increases.

The money supply in the United States shrunk for the third consecutive month and is falling at the quickest rate since the Great Depression, according to new data from the Federal Reserve.

Andrew Moran reported the details for Epoch Times.

In February, the M2 money supply – a measure of how much cash, bills, bank deposits, coins, and money market funds are circulating throughout the national economy – fell 2.24 percent from the same time a year prior, reversing January’s decline of -1.7 percent. This marked the third consecutive month of a declining money supply.

The M2 money supply fell 3.13 percent year-over-year for the week ending March 6, pointing to another contraction in March.

At the end of February, the total U.S. money supply stood at $21.099 trillion.

Between 1929 and 1933, there was a 28 percent decline in the money supply.

Despite the year-over-year decline, the money supply remains nearly 38% above its level prior to the pandemic.

The downward trend, which began in February 2021, was the result of the central bank reversing its liquidity injections during the pandemic, the Federal Reserve reducing its immense balance sheet, and falling bank deposits.

Many economies around the world are reporting sluggish or declining M1 money supply growth.

More on this story via The Republic Brief:

In the European Union, the M1 annual growth rate contracted by 2.7 percent in February, down from negative 0.8 percent in January. The United Kingdom’s M1 slowed to 1.55 percent in January. The M1 for Canada fell for three straight months to close out 2022, tumbling 3.57 percent in December. CONTINUE READING…

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