Tag Archives: M2

M2 Turns Negative for the First Time and that’s a Long Time!

There are tons of measuring sticks out there…. almost all of which we look at and follow, at least at one time or another…..

What grabs our attention is when the measuring sticks do unique things….or have never happened before!

M2 – aka Money Supply

According to Investopedia M2 is best described as the following:

M2 is the U.S. Federal Reserve’s estimate of the total money supply including all of the cash people have on hand plus all of the money deposited in checking accounts, savings accounts, and other short-term saving vehicles such as certificates of deposit (CDs). Retirement account balances and time deposits above $100,000 are omitted from M2.

Check out the latest reading of M2

While close in 1994, it stayed positive, for the year 2022… M2 was a negative for the year for the first time ever!

Note also as compared to 1994, the rapid draw down in 2022…

Why are we watching this?

This draw down of money in the system may put pressure on certain risky players i.e. Companies that use Junk or High Yield Debt!

Just a heads up to let you know what we are watching!

Have a Great “M2 Analysis” Day!

John A. Kvale CFA, CFP

Founder of J.K. Financial, Inc.

A Dallas Texas based fee only

Financial Planning Total Wealth

Management firm.



The Economic Recovery Problem in One Simple Graph

While listening to a recent Richard Fisher interview I was reminded of the main problem of this current sloooow economic recovery. The US Economy is certainly growing, bu it has not grown at its fullest potential and continues to plod along at a slow pace.

Fisher’s comments were from a worried stance. Being a Hawk (non advocate for additional help from the FOMC) his fear is once the economy gets going, it may take off too fast. Maybe he is correct, but for now, we could only be so lucky.

M2: The Velocity of Money

This from FRED (St. Louis Federal Reserve Research):

The velocity of money is the frequency at which one unit of currency is used to purchase domestically- produced goods and services within a given time period. In other words, it is the number of times one dollar is spent to buy goods and services per unit of time. If the velocity of money is increasing, then more transactions are occurring between individuals in an economy.

In non-fancy terms, M2 is money in motion. The FOMC has been pushing money into the banking system for some time. Let’s see if it is helping speed up M2?


To be fair, in order for M2 to accelerate, there must be demand for loans, and other money movement by the businesses and citizens of the US. So far, as you can tell, Fisher’s worries are unwarranted. A spike or even blip upward would be nice!

Have a Great Day!

John A. Kvale CFA, CFP

8222 Douglas Ave # 590
Dallas, TX 75225