The Money Supply Continues Its Biggest Collapse Since The Great Depression

Since April 2021, money supply growth has slowed quickly, and since November, we've been seeing the money supply repeatedly contract year over year.

The money supply metric used here-the "True," or Rothbard-Salerno, money supply measure-is the metric developed by Murray Rothbard and Joseph Salerno, and is designed to provide a better measure of money supply fluctuations than M2. In recent months, M2 growth rates have followed a similar course to TMS growth rates, although TMS has fallen faster than M2. In October 2023, the M2 growth rate was -3.35 percent.

The fact that the money supply is shrinking at all is remarkable because the money supply in modern times almost never gets smaller.

The money supply has now fallen by $2.8 trillion since the peak in April 2022.

Proportionally, the drop in money supply since 2022 is the largest fall we've seen since the Depression.

As of October, total money supply was still up 32 percent since January 2020.

Since 2009, the TMS money supply is now up by nearly 186 percent. 

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