Pandemic-induced stimulus measures result in surge in money supply
Pandemic-induced stimulus measures in the United States have led to a significant increase in the money supply. The central bank has printed nearly 80% of all dollars in circulation since 2020, resulting in detrimental effects on the economy.
Main breakdowns of key points:
- The number of dollars in circulation has jumped 375% in just three years.
- At the start of 2020, there was $4 trillion in circulation. Now, there is almost $19 trillion in M1 circulation.
- The mass money printing was aimed at providing stimulus packages and money to those affected by the lockdown.
- The devaluation of the currency has led to surging prices and inflation.
- US inflation started to increase again in July to 3.2% following a year of monthly decreases.
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US inflation and its impact on households
Inflation in the US has made basic necessities unaffordable for many households. Despite the increase in inflation, the median US household has more credit card debt than savings. The consequences of the surge in money supply and inflation are taking a toll on the economy.
Global USD transaction peak and de-dollarization
The US dollar still holds a dominant role in international transactions, with a recent peak of 46%. However, de-dollarization is becoming a reality as more countries aim to conduct trade in their own currencies. Brazil’s President has called for the BRICS nations to create a common currency for trade and investment, reducing dependence on the US dollar.
Hot Take
The surge in money supply and resulting inflation in the US have created significant economic challenges. While the dollar still maintains its dominance in global transactions, de-dollarization efforts are gaining momentum. The long-term impact of these economic developments remains uncertain, but it is clear that the consequences of excessive money printing are being felt by households and the economy as a whole.
