Federal Reserve and Forex
Money Supply, Interest Rates and Balance Sheet Reductions suggest the Federal Reserve is complicit in bankrupting the Country.
The Central Bank of the United States also known as the federal reserve or "the Fed".
M2 Supply in 2000 According to Federal Reserve $4,666 Trillion Dollars.
M2 Supply in 2020 According to Federal Reserve $15,380 Trillion Dollars.
Printed more than 3 Trillion in 2020.
M2 Supply in 2024 According to Federal Reserve $20,754 Trillion Dollars.
Decreasing by amounts never seen before.
The money supply is the total amount of money - cash, coins and balances in bank accounts - in circulation and is referred to as "M1", "The M2" is Savings and CD(certificate of deposits) account balances with under $100,000 + M1(cash/coins/bank balances). M2 has only declined a total of 4 times in the last 150 years and it is happening right now.
Starting in April of 2022 M2 decreased each month for 11 months consectutively and on May 2023 the first tick up finally and just barely happened. M2 supply continued to decrease for another 5 months consecutively until November of 2023. To put that in dollar value perspective the M2 Supply Index was priced at $15,432(TRILLION DOLLARS) beginning Feburary of 2020 while the Nasdaq 100 was listed at $9,016 per share. Today(May, 26 2024) the M2 supply has increased by 35% to 20,841(TRILLION DOLLARS) and the Nasday 100 is priced at $18,870 per share an increase of 109%. If M2 only needed to increase by 35% for the Nasdaq to increase by 109%. How much does M2 need to decrease for the Nasdaq to fall 10 or 20%?
Fed raises interest rates and causes Banks to tighten lending standards. Higher Interest Rates will decrease the amount of money loaned out which causes businesses to cost cut(invest less) and lay people off. Businesses return on investment is lower because the amount invested is lower due to less capital from loans and workers make less because more workers looking for jobs causes wages to decrease and less people with jobs will decrease the supply of money.
Do not Fight the Fed
In April 2022 Money Supply peaked at $21,722 Trillion Dollars and decreased by 4.75% to $20691 Trillion Dollars by October 2023. Money Supply decreased at the fastest pace since the great depression during that period. By comparison the Nasdaq 100 Index increased by 2.79% from $14,934 to $15,350 dollars per share during that time. The Federal Reserve also raised rates 16 times during that same April 2022 to August 2023 time period.
In 2024 the M2 Supply has finally started to increase while the Fed looks to keep interest rates high and lower its balance sheet. Since November 2023 M2 has increased by less than 1%(0.66) from 20705 to 20841 while the Nasdaq 100 index has increased by 28.24% from $14,834 to $19,023 per share by comparison. This discrepancy suggest that something is broken and the Fed needs to adjust policy to increase M2 supply or get market expectations back in order by unloading the 7.2 Trillion in assets it has been holding.
Currency Wars have begun and there is no clear winner in sight.
China says its prepared to keep its currency at whatever levels necessary to avoid an international crisis.
When you consider the fact that the riots in HONG KONG were initially started because of the way powers at be in that part of the world selectively chooses its wording. We can only wonder why China would choose to release such a powerful statement.
China has managed to perfectly prop its currencies up since the election of the 45th president back in 2016. WTO reported China exports declined another percentage point in 2022 after climbing to 15% worldwide in 2021, Chinese world merchandise imports were reported to be 10.6% vs world merchandise imports of 13.2% for the U.S. and Exports stood at 14.4% of world merchandise for China and only 8.3% for the United States. The Chinese Communist Party is executing strategies laid out by the current and previous United States Administrations granted North America has during that same time period managed to import 25% less merchandise.
The "Made in China" label is so widely accepted due to taking the ideas/inventions of others and executing them better, sooner and at a much cheaper price. The EV sector has been the latest example of China reinventing the trending innovation and exporting back to the very people who began the important work. Strategies like letting their banks fail and taking them over, something that many in the current administration were begging the United States to do in 2008. China has admittedly and explicitly stated that they want to make/sell more goods on their home soil and our current administration set them up to do so perfectly by tariff.
China already accounts for 47% of World GDP and we all know they're not going to stop there. Bottomline is recent developments like BRICS expanding and the economic gains of Russia while currently under thousands of sanctions has helped China gain influence globally. The United States may want to offer a decent proposition before it is too late but with U.S. elections in the coming months the people in charge of making those decisions can not afford to seem weak on China at the moment.