Why Soaring Rates Have Failed to Kill US Growth

 

The graph, which I have created with a little help from data from the Federal Reserve St. Louis' FRED database, and which I have processed through ChatGPT 4.0, illustrates what has happened.

In 2020-21, the USA implemented massive monetary and fiscal policy easing. Basically, the American government sent money directly to every citizen. These funds were financed by the government issuing treasury bonds, which the Federal Reserve purchased with newly printed American dollars.

This money circulated in the American economy. The money supply consists of two parts: physical notes and coins in circulation and deposits in banks. The graph below shows the total deposits in the banks - adjusted for inflation.

Lars Christensen The Market Monetarist 19 January 2024

https://marketmonetarist.com/2024/01/19/why-soaring-rates-have-failed-to-kill-us-growth/

Very good. But this might have someting to do with it.

Institutions and investors together have a record $5.7 trillion parked in cash-like money-market funds

ome of that money has simply shifted to higher-yielding money markets from traditional bank accounts.

Englund: Money-market funds (englundmacro.blogspot.com)