Stimulus

An interesting point on M1 and M2 [Measures of money]. With the signing of the 1.9T$ bill today in the US, we’ve essentially created 6T$ over the last 10 months. Just like that…

Covid19 has brought  unprecedented suffering to many. Deaths, Unemployment, Medical complications, lifestyle changes, Social unrest and several other ramifications which we are yet to experience. If anything, it has taught us highlighted how abysmally poor we are in collectively addressing pressing issues. It has also shown us that when disaster strikes, we only take care of our own and we are selectively biased even at that. Nature gave us yet another opportunity to show how we could better ourselves and elevate us to the next stage of evolution and we miserably failed. With our myopic non-collaborative actions, pushing politics and power over general good, we’ve defined a new low. Mileage on isolated or individual efforts unfortunately does not carry the ripple effect that can scale. Nothing surprising there – Humans are selfish creatures. We of course needed something to balance all the intelligence and cognitive advances we supposedly have over other living things. Humanity rests is constant chaos and Covid19 was continues to fuel that chaos.

Quite a digression, eh?

 

 

Read The Fed Isn’t Printing As Much Money As You Think

So last April the Fed changed the rules and eliminated the six-withdrawal limit on savings accounts. It wrote:

The interim final rule allows depository institutions immediately to suspend enforcement of the six transfer limit and to allow their customers to make an unlimited number of convenient transfers and withdrawals from their savings deposits at a time when financial events associated with the coronavirus pandemic have made such access more urgent.

It was an obvious and nearly risk-free way to help people. Just let them have easier access to their savings.

But it changed the relationship between M1 and M2.

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