There has been so much M1 money supply shoved into the system, that inflation is a pressure safety valve going off, you won't be able to control it until M2 and M1 money growth rate normalizes. I think we are headed toward further inflation for the following reasons:
- Treasury interest rates are close to zero.
- Bank reserves are increasing, therefore liabilities are increasing, therefore prime interest rates are decreasing
- Commercial Loans are decreasing despite the low-interest rates
- Real estate loans are flatlining, my guess is that the Asset Bubble about to burst.
- Therefore consumer loans should be increasing, this is exactly what is happening now.
- The M1/M2 ratio is the highest that it has ever been, there is so much M1 money, that I don't think the Feds will be able to control the M2 money growth.
I'm new to all of this. So I'm wondering if my understanding is flawed? How can the feds control the M2 money supply? Is the M1 and M2 growth rate even related to inflation?
Submitted October 31, 2021 at 02:22AM by matrix3912 https://ift.tt/2Y0t0jc
