U.S. Money Supply Is Doing Something No One Has Seen Since the Great Depression, and It Implies a Big Move to Come in StocksOver the past four years, volatility has ruled the roost on Wall Street. The 127-year-old Dow Jones Industrial Average (DJINDICES: ^DJI), benchmark S&P 500 (SNPINDEX: ^GSPC), and growth-powered Nasdaq Composite (NASDAQINDEX: ^IXIC) have traded off bear and bull markets in successive years since this decade began.........
..........Although there are number of prominent measures of money supply, most economists and investors tend to focus on M1 and M2. The former is a measure of cash and coins in circulation, as well as demand deposits in a checking account. It's money that can be easily accessed and spent by consumers.
Meanwhile, M2 money supply accounts for everything in M1 and adds in savings accounts, money market funds, and certificates of deposit (CDs) below $100,000. While this money can also be spent by consumers, it requires a little extra work to access it. It's M2 that's currently in focus.................
................But it's those rare instances where M2 does decline, and consumers are forced to forgo some of their purchases, that have resulted in trouble for the U.S. economy and Wall Street.
...........Putting aside minor year-over-year declines, there have been only five instances, when back-tested to 1870 -- based on data from Reventure Consulting CEO Nick Gerli -- where M2 has fallen by at least 2%: 1878, 1893, 1921, 1931-1933, and July 2022-currently. All four previous instances led to deflationary depressions and a sizable increase in the U.S. unemployment rate............
https://www.yahoo.com/finance/news/u-money-supply-doing-something-100600870.html
