USA M2 supply has fallen by 1 Trillion in the last 2 years

[stompix]

There have been a series of articles that have gone unnoticed by the bitcoin community, of course the titles are a bit to clickbaitish for my liking but still:

US money supply falling at fastest rate since 1930s

U.S. money supply is falling at its fastest rate since the 1930s, a red flag for the economy and financial markets.
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.

The problem with that title is that the record downturn pales in comparison with the previous growth, but still, the M2 supply went down from a record high of 21.7 trillion to 20.7 trillions, it's not much when you compared to the 3 trillion growth in just 4 months in 2020 but seems like the interest rates are finally kicking in and this will reduce further increase policies. The same thing stands for the EU where the M2 has also decreased in the same period by 0.3 trillion.

One thing is that Quantitative Tightening works, and the interest rates seem to have also worked, so what's in for the future, and more importantly, how will this affect Bitcoin?

There are some alarmist opinions, like

U.S. Money Supply Is Shrinking the Most Since the Great Depression. Is an Economic and Stock Market Meltdown on the Way?

while others take a more neutral tone:

US money supply falls at unprecedented rate, possibly cooling inflation

So, after a period of inflation is the US going straight to a period of deflation?
How would that affect Bitcoin since it never experienced deflation in its lifetime as it was born after the 2009-2009 events?

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[mindrust]

That’s good news if you want the inflation to stop. However as you pointed out, we haven’t experienced anything like that since the Great Depression.

Is the stock market strong enough to withstand the quantitative tightening? the S&P500 is at its ATH’s just like how it was before the Great Depression, the dotcom bubble, and the mortgage bubble.

Gold has been making new ATH’s, stocks are slowing down, the money supply is shrinking…

These are all bad news for the stock market. I think we are at the beginning of a massive stock market crash.  As the stocks go down, gold will go above $3k while btc will hit $100k… We’ll soon find out.

[suzanne5223]

Is an Economic and Stock Market Meltdown on the Way?

Logically, the swiftness of the US money supply fall has been tremendous ever since Russia, China, South Africa, Egypt, Ethiopia, Iran, and the United Arab Emirates. have formed an alliance called BRICS.  Meanwhile, some African countries that are not among the BRICS also advise the usage of their national currency for inter-trade instead of the use of the US dollar which is sometimes hard to get for some people.
Despite, knowing what is at sake I am still surprised that the US government never seize to print more fiat currency which makes me think each President is somehow stealing funds through the printing of fiat currency since the budget and spending of the Central Banks cant be publicly investigated like other offices that have to do with the country.
In the meantime, the economic and stock meltdown will happen if the issue presist.

So, after a period of inflation is the US going straight to a period of deflation?
How would that affect Bitcoin since it never experienced deflation in its lifetime as it was born after the 2009-2009 events?

The government's decision now will determine if the deflation period will occur but, unfortunately, they keep making the same mistake over again.
The only way I think this will affect Bitcoin is that people will be looking for a safe investment/asset and in BTC they will find that. An example is what the Chinese government does by buying BlackRock BTC spot ETF after a closed-door meeting with Larry Fink days ago.

[philipma1957]

Its all a plan to get Trump elected.

We are going to crash and burn bigly before the election.

Trump will win easy.

[stompix]

Logically, the swiftness of the US money supply fall has been tremendous ever since Russia, China, South Africa, Egypt, Ethiopia, Iran, and the United Arab Emirates. have formed an alliance called BRICS.  

It has nothing to do with BRICS, lol, look at their currencies going down the drain!

The move is just because of the interest rates, and monetary tightening, if it were because lol, I mean seriously lol, the myth about de-dollarization the dollar would have depreciated against those but look at the iranian rial tumbling down the drain do you see it happening?

Its all a plan to get Trump elected.
We are going to crash and burn bigly before the election.

Crash? No, no way, not until the election!
And actually, deflation coming will initially help Biden more since the consumers will be first thrilled about the decreasing price of everything and then 1-2 years later about the effects of that.
Remember 2007-2009? There were tons cheering for the housing price collapse as well as the price of oil and gas tumbling down, then 1 year later screaming about losing their jobs!

[STT]

The only way I would guess Trump receives another chance at reelection is via the economy recession route but I dont think that is occurring but that'd be only historical precedent for that happening especially.         The famous quote I remember is by the process of inflation and deflation the population will lose the value they hope to retain, I will have to look it up but again historically this happened before.   Every FIAT currency fails is what we have to respect is both the past and the future scenario, the details of how we dont know because surely technology alters alot of it.

By a continuing process of inflation, Governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens. By this method they not only confiscate, but they confiscate arbitrarily; and, while the process impoverishes many, it actually enriches some.
Keynes

(mis)Quotation: "If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around them will deprive the people of all property until their children wake up homeless on the continent their Fathers conquered.... I believe that banking institutions are more dangerous to our liberties than standing armies.... The issuing power should be taken from the banks and restored to the people, to whom it properly belongs."

misattributed to Jefferson but apparently he said some of those words.   Anyhow my take the failure of the currency that has occurred, is failing the people today and will collapse in the future cant be taken as a surprise as almost every country has experienced this before in previous generations.

[hatshepsut93]

Sometimes I check Bitcoin news sites like Coindesk and they tend to explain the recent price movements as the result of some economic metrics of the US. Like higher interest rates could negative impact the price because investors move money from Bitcoin to bonds. And I think it defeinitely happens, but the question is whether the scale is large enough to matter in long term, or is it just something that only day traders pay attention to. Because these price movements that are part of the larger halvening cycle are just dwarfing all the reactions to economic news and other real world events.

[OcTradism]

The problem with that title is that the record downturn pales in comparison with the previous growth, but still, the M2 supply went down from a record high of 21.7 trillion to 20.7 trillions, it's not much when you compared to the 3 trillion growth in just 4 months in 2020 but seems like the interest rates are finally kicking in and this will reduce further increase policies. The same thing stands for the EU where the M2 has also decreased in the same period by 0.3 trillion.

One thing is that Quantitative Tightening works, and the interest rates seem to have also worked, so what's in for the future, and more importantly, how will this affect Bitcoin?

All these policies and changes have impacts on Bitcoin, make it bullish because more money will be added to economy with time, inflation will never disappear or completely solved in means of decreasing it.

Money printing can be reduced in their printing rate and inflation rate can be slow down in short term or mid term but in long term, the world economy is impacted by massive new money supply and higher inflation.

They can not help their fiat currencies to gain purchasing power back, only lose it more with time.

People lost hope (A. Pompliano)
The purchasing power of the US. dollar with time.

[btc78]

So, after a period of inflation is the US going straight to a period of deflation?
How would that affect Bitcoin since it never experienced deflation in its lifetime as it was born after the 2009-2009 events?

Since like you said, bitcoin’s response to deflationary environment has yet to be seen we really have no idea how it will perform in the future. We know that during inflation, most turn to bitcoin and it provides a better option to investors but will it also be the same during deflation?

No one knows.

[cryptosize]

I expect FED to start a new QE by Q4 2024 at the latest (the climate/green transition would be a good excuse)... they won't let deflation kicking in, not to mention the US elections almost always coincide with a new QE round and halving (coincidentally or not, only Satoshi knows).

Their mandate is to keep inflation at 2%. Of course there is no penalty/punishment if they miss the target (as we saw back in 2021-2022).

I also expect AI & robots to apply a huge deflationary pressure later on this decade (by 2030 at the latest), so they'll be inclined to print even more money to keep inflation at 2%. That's good for BTC.

Few people realize this, but FED can theoretically print an unlimited amount of dollars, provided inflation stays at 2%. It would be possible with AI, robots and unlimited resources (coming from the space perhaps).

Of course that's an optimistic scenario, assuming that something really bad (Taiwan invasion/WW3) doesn't happen.

[Fortify]

There have been a series of articles that have gone unnoticed by the bitcoin community, of course the titles are a bit to clickbaitish for my liking but still:

US money supply falling at fastest rate since 1930s

U.S. money supply is falling at its fastest rate since the 1930s, a red flag for the economy and financial markets.
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.

The problem with that title is that the record downturn pales in comparison with the previous growth, but still, the M2 supply went down from a record high of 21.7 trillion to 20.7 trillions, it's not much when you compared to the 3 trillion growth in just 4 months in 2020 but seems like the interest rates are finally kicking in and this will reduce further increase policies. The same thing stands for the EU where the M2 has also decreased in the same period by 0.3 trillion.

One thing is that Quantitative Tightening works, and the interest rates seem to have also worked, so what's in for the future, and more importantly, how will this affect Bitcoin?

There are some alarmist opinions, like

U.S. Money Supply Is Shrinking the Most Since the Great Depression. Is an Economic and Stock Market Meltdown on the Way?

while others take a more neutral tone:

US money supply falls at unprecedented rate, possibly cooling inflation

So, after a period of inflation is the US going straight to a period of deflation?
How would that affect Bitcoin since it never experienced deflation in its lifetime as it was born after the 2009-2009 events?

It's a good thing really, people can get very lazy when money is cheap and I'd much rather prefer a gradual decompression of the easy money through Covid or prior years, than a massive burst like we saw in the financial crisis. That excess money supply was fueling up a huge balloon of debt and this is discreetly letting all the air back out. You could have complained in the past that the central banks were often wrong and reactionary, but this would suggest that they are at least now fixing a problem they created. You can bet that a certain element of it is going to be related to China and Russia who have tried to extract the US dollar from their own foreign currency reserves, because it does give America a lot of leverage as it is.

[cryptosize]

It's a good thing really, people can get very lazy when money is cheap and I'd much rather prefer a gradual decompression of the easy money through Covid or prior years, than a massive burst like we saw in the financial crisis. That excess money supply was fueling up a huge balloon of debt and this is discreetly letting all the air back out. You could have complained in the past that the central banks were often wrong and reactionary, but this would suggest that they are at least now fixing a problem they created. You can bet that a certain element of it is going to be related to China and Russia who have tried to extract the US dollar from their own foreign currency reserves, because it does give America a lot of leverage as it is.

I'm afraid you'll have to get used to it, shrinking the money supply is only temporary (or as they say "when in doubt, zoom out"):

https://www.forbes.com/sites/sergeiklebnikov/2019/10/24/stopping-global-warming-will-cost-50-trillion-morgan-stanley-report/
https://www.depledgeswm.com/depledge/can-the-us-meet-its-50-trillion-net-zero-commitment-3-factors-to-think-about/
https://www.dw.com/en/davos-green-transition-is-50-trillion-investment-opportunity/a-56375018
https://www.scmp.com/business/banking-finance/article/3198181/climate-change-carbon-reduction-us50-trillion-business-opportunity-asia-says-un-special-envoy-mark

50 trillion $ just for the US... for a global transition it's closer to 100 trillion $, more than the global GDP currently.

There's no denying that this is good for Bitcoin...

I pity the Average Joe who doesn't know what's coming next and how much his savings will be devaluated to fuel this green bonanza.

[cryptosize]

UN climate chief presses for faster action, says humans have 2 years left ‘to save the world’

https://apnews.com/article/climate-change-finance-un-elections-stiell-0b176237b1e4a78d28d5dbcbbf7809f0

With governments of the world facing a 2025 deadline for new and stronger plans to curb carbon pollution, nearly half of the world’s populations voting in elections this year, and crucial global finance meetings later this month in Washington, United Nations executive climate secretary Simon Stiell said Wednesday he knows his warning may sound melodramatic. But he said action over the next two years is “essential.”

It seems a climate/green QE is imminent...

ECB has given us a hint:

https://www.ecb.europa.eu/ecb-and-you/explainers/html/why_climate_change_matters.en.html

4-5% interest rates won't last for too long...

Climate > inflation

[Darker45]

Well, I guess this would eventually happen. After what's probably an excessive yet necessary money printing done during the pandemic and even immediately after it to keep the economy afloat, it's probably just a matter of time before the opposite step would be done. The successive and aggressive interest rate hikes have eventually led to the reduction of money supply. I'm not sure if the target is yet to be hit, but it's possible that rate hikes would be replaced with cutting of rates soon. 

Money supply inflates and deflates all the time; it has to be adjusted every now and then, but that doesn't mean a lot in the bigger picture. One, the supply is still continuously increasing in general. Two, it doesn't translate into a deflationary economy in which prices are decreasing rather than increasing.

[franky1]

less money in M2 simply means less in circulation of the lower classes.. where it has "trickled up" into the institutional control of the M3 of investment custodian banks

the money is not destroyed. its just passed up the line to institutions
prices of goods are still higher then previous years, but less money circulating in the pockets and basic lower class savings/accounts

aka rich get richer, poor get poorer..

[stompix]

UN climate chief presses for faster action, says humans have 2 years left ‘to save the world’

Wow, so we got another re-spawn point?
Cause we had about 10 years back in 2010 and 3 years in 2017, seems like we get extension after extension!

Few people realize this, but FED can theoretically print an unlimited amount of dollars, provided inflation stays at 2%. It would be possible with AI, robots and unlimited resources (coming from the space perhaps).

Yeah, cause the first transport of ultimanium mined from Proxima Centauri is set to arrive somewhere in January! 

And I think it defeinitely happens, but the question is whether the scale is large enough to matter in long term, or is it just something that only day traders pay attention to. Because these price movements that are part of the larger halvening cycle are just dwarfing all the reactions to economic news and other real world events.

Remember when the war started? Bitcoin was supposed to not be resistant to that kind of stuff, it went down with everything else.
The more it becomes more of a mainstream investment vehicle as it seems it's taking this path the more it will be correlated to other investments, to interest rates, and to real-world events.
Despite being a thing that was supposed to fight inflation it had its worst bar season exactly during a peak of inflation in the world, starting to grow ironically exactly when the inflation started to go down.