Hacker News Reader

Comment by peregrine | Hacker News Reader

This should be the link.

Sharing a link to a graph with minimal context, might as well be spam/misinformation.

Definitely. The M2 supply grew by about $4T last year, from $15T to about $19T, it's a lot, but it's about one annual federal budget in normal years. $4T is like 20% of GDP, not nothing, but not hyper-inflationary.

The question is will M2 grow by 20% per year, or is this a one-off?

When that article was posted, M1 money supply for feb. 1 of this year was still listed as 6.8 trillion, a 70% increase vs. 1 year ago. Right now it's almost 3x as much. Although it does look like the graph in that article has been updated automatically as well.

M1 has become basically a meaningless category. The Fed blog post says that their April 24 change to Regulation D allows banks to remove the 6 tx/month limit on savings and money market accounts, which classifies them as M1. The growth in M1 since April has largely been banks changing their policies and their reporting strategies.

Sure enough, the rapid growth in M1 starts on April 24, and M1 is now about $1B less than M2 (roughly $18B vs. $19B). We should be looking at M2, which has grown by about 25% ($15-19T): still a big story, but nowhere near as dramatic as this graph.

> On the other hand, it’s not immediately clear what advantage there is from the bank’s perspective in relabeling savings accounts as transactions balances.

Does anyone have any insight into why banks would relabel their savings accounts?

This is also interesting (tangentially related):

https://twitter.com/RaoulGMI/status/1361509921624317952

Reply on news.ycombinator.com