US Mortgage Rates Rise Slightly (+8% YoY) As M2 Money Growth Dies (-3% YoY) In Plain Sight (M2 Money Growth Has Been Negative For All Of 2023)

Confounded Interest ^ | 01/12/2024 | Anthony B. Sanders

[Kaiser8408a]

We are closing out the first week of the New Year and 30-year conforming mortgage rates are up slighlty.

Mortgage rate GROWTH is now at 8% year-over-year (YoY). While M2 Money growth has died and is down -3% YoY.

Bank credit growth has been negative since July 2023 and M2 Money growth has been negative for the entirity of 2023.

Here is a video of The Federal Reserve managing interest and mortgage rates.

[Fido969]

Spending down the Covid money.

[Robert357]

M2 is the U.S. Federal Reserve's estimate of the total money supply including all of the cash people have on hand plus all of the money deposited in checking accounts, savings accounts, and other short-term saving vehicles such as certificates of deposit (CDs). Retirement account balances and time deposits above $100,000 are omitted from M2.

In my mind, M2 is meaningless in terms of developing monetary policy.

In theory monetary policy is about controlling inflation, consumer spending, and the loaning of money to be invested in things.

Today, credit card limits and credit card spending along with all that Baby Boomer money tied up in IRA's and 401k’s also have a significant impact on how what is “money” and how it is spent within an economy. Back when M2 was the be-all of monetary policy, people paid “cash” for cars and most major purchases. They also didn't buy major appliances on credit, nor did they make home improvement loans nor take out reverse mortgage lines of credit.

M2 as a monetary statistic was created when M1 no longer proved to be useful. Same with M3 and M4. None of them really include the concept of “credit or loans” from the perspective of Joe-sixpack.

As to money velocity, let's take a step back and look at all those countries (Panama, Ecuador, etc.) that either officially or unofficially use US dollars as a currency. Then look at our illegal and legal immigrant situation, where lots of money is sent “home” (Mexico, Nicaragua, Cuba, etc.) to family members in other countries. The concept of
the velocity of money should no longer be M3 divided by M0 and inflation in one particular country is no longer measured only by M2, M3, M4 or the velocity of money.

The value of M2 and its control has no more relevance today than the kind of coinage used to pay Roman Legions.

[Jacquerie]

I appreciate the continual negative economic news from Confounded Interest.