This is a bit of a mix of micro and macroeconomics, but someone asked me how write-downs would impact the money supply this week. I didn't have a good answer.
Usually, this isn't that big of a deal. But with the commercial real estate market situation, it's likely that a large number of write-downs will happen in the next few years. M3 includes this asset, so I get that M3 will potentially drop.
But in terms of total money supply, will this write-down help what the Fed/ECB/etc. is trying to do to tighten the money supply to get inflation under control? Or, since it's not M1, and has no velocity, will it just be secondary money supply impacts (collateral for lending, reducing leverage, etc)?
