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user142
user142
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First off, I'm not an economist, I'm just trying to understand how the global monetary system actually works, so I might get some things wrong here.

The US M2 money supply has been growing for the past 6 months and I'm struggling to understand why. All the metrics I usually look at seem to indicate a shrinking money supply. The balance sheet of the Federal Reserve is shrinking which means they are reducing their assets and thereby taking reserves out of the system (Quantitative Tightening). The reverse repo has been relatively stable over the last 6 months. The Treasury General Account also has been relatively stable over that time period. This all makes me wonder where that increase in M2 is actually coming from. Is it just the banks lending more money? But aren't they constrained by the amount of bank reserves in the system? Or is it foreign governments reducing their USD holdings? Which charts do I need to look at to understand where this increase in M2 is coming from?

First off, I'm not an economist, I'm just trying to understand how the global monetary system actually works, so I might get some things wrong here.

The US M2 money supply has been growing for the past 6 months and I'm struggling to understand why. All the metrics I usually look at seem to indicate a shrinking money supply. The balance sheet of the Federal Reserve is shrinking which means they are reducing their assets and thereby taking reserves out of the system. The reverse repo has been relatively stable over the last 6 months. The Treasury General Account also has been relatively stable over that time period. This all makes me wonder where that increase in M2 is actually coming from. Is it just the banks lending more money? But aren't they constrained by the amount of bank reserves in the system? Or is it foreign governments reducing their USD holdings? Which charts do I need to look at to understand where this increase in M2 is coming from?

First off, I'm not an economist, I'm just trying to understand how the global monetary system actually works, so I might get some things wrong here.

The US M2 money supply has been growing for the past 6 months and I'm struggling to understand why. All the metrics I usually look at seem to indicate a shrinking money supply. The balance sheet of the Federal Reserve is shrinking which means they are reducing their assets and thereby taking reserves out of the system (Quantitative Tightening). The reverse repo has been relatively stable over the last 6 months. The Treasury General Account also has been relatively stable over that time period. This all makes me wonder where that increase in M2 is actually coming from. Is it just the banks lending more money? But aren't they constrained by the amount of bank reserves in the system? Or is it foreign governments reducing their USD holdings? Which charts do I need to look at to understand where this increase in M2 is coming from?

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user142
user142
  • 101
  • 1

Where is the recent increase in US M2 coming from?

First off, I'm not an economist, I'm just trying to understand how the global monetary system actually works, so I might get some things wrong here.

The US M2 money supply has been growing for the past 6 months and I'm struggling to understand why. All the metrics I usually look at seem to indicate a shrinking money supply. The balance sheet of the Federal Reserve is shrinking which means they are reducing their assets and thereby taking reserves out of the system. The reverse repo has been relatively stable over the last 6 months. The Treasury General Account also has been relatively stable over that time period. This all makes me wonder where that increase in M2 is actually coming from. Is it just the banks lending more money? But aren't they constrained by the amount of bank reserves in the system? Or is it foreign governments reducing their USD holdings? Which charts do I need to look at to understand where this increase in M2 is coming from?