The money supply (M2) has bounced to March 2023 levels and has been rising almost every month since October last year. Furthermore, US government deficit spending has more than offset the decline in the Federal Reserve balance sheet. While the Fed’s balance sheet has shrunk by $1.5 trillion from its peak, the US government deficit remains above $1.5 trillion per year.The money supply (M2) in the United States has bounced above March 2023 levels, while deficit spending offsets any Fed balance sheet reduction.It is no surprise to read that the Federal Reserve has kept rates unchanged. Mr. Powell indicated that there are no rate hikes on the horizon, which was received with relief by market participants, but he also cast doubt about the expectations of rate cuts. However, the single most
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