Thread by @hem_day

🇺🇸⚡️In the United States, there is a trend of contraction in the money supply despite record growth in lending.
1/6
#usa #finance #money #dollar #ukrainewar #economy #liquidity #banks #banking #fed #ustreasury

This is due to the critical gap between weighted average deposit rates, which are below 1%, and the current market rate for government and corporate bonds.
2/6

This gap creates an incentive for people to redistribute the money supply into alternative financial instruments. And the decrease in the intensity of distribution of helicopter money from the US Treasury & the Fed reducing the balance sheet also contribute to this trend.
3/6

However, this gap plays a stabilizing function in the US financial system by pushing liquidity into the debt markets in the conditions of the printing press shutdown.
4/6

It leads to two impacts on the economy and the financial system, it accelerates money supply turnover and affects inflation, which primarily affects low-income segments of the population…
5/6

… and it redistributes the money supply into alternative financial instruments which concerns the wealthy segments of the population. The reason for the low deposit rates is the excess liquidity in the banking system formed over 15 years of monetary frenzy.
6/6