Incoming Crisis? Global Money Supply Surges to Near $90 Trillion as Geopolitical Tensions Rise

by

As a seasoned researcher with over two decades of experience in financial markets, I find myself both intrigued and concerned by the recent surge in global money supply to unprecedented levels of $89.7 trillion. The rapid increase in money supply, reminiscent of the initial pandemic response in 2020, is a stark reminder of the potent mix of central bank intervention and geopolitical tensions that can shape our economic landscape.

The total Money supply in the United States, the Eurozone, Japan, and China has for the first time in history reached $89.7 trillion, having skyrocketed by a whopping $7.3 trillion over the past year.

As reported by Kobeissi Letter on social media platform X, which used to be called Twitter, the recent increase in the worldwide money supply is the largest in three years, closely mirroring the surge observed during the early stages of the pandemic response in the first half of 2020.

According to a U.S. source, the amount of money circulating within the nation increased by an astonishing $410 billion compared to the previous year, reaching a staggering total of $21.2 trillion. This implies that at the start of 2020, the country’s money supply was approximately 27% lower than its current levels.

UPDATE: The combined total of money in circulation in the U.S., Eurozone, Japan, and China has hit an unprecedented high of $89.7 trillion.

In just one year, global money supply has soared by a staggering $7.3 trillion.

This represents the most significant increase in three years and is reminiscent of the surge seen at the start of…

— The Kobeissi Letter (@KobeissiLetter) October 1, 2024

According to the Kobeissi Letter, “quantitative easing is being resumed worldwide” as central banks resume buying securities on the open market to lower interest rates and boost the money supply.

As per Investopedia, quantitative easing increases the amount of liquidity available for banks, thereby stimulating lending and investments, and boosting their reserve funds.

This year, as per a report by CryptoGlobe, the value of gold has shown one of its strongest year-on-year increases in this century due to a continuous expansion of the money supply and escalating geopolitical conflicts.

Currently, the valuable metal is being traded at $2,660 following a 1% increase over the past 24 hours and a significant 30% growth throughout this year. This recent surge in its price occurred after Iran launched approximately 180 ballistic missiles towards Israel, which they claimed was a retaliation for the killings of Hamas’s political leader and an Iranian commander.

The amount of M2 money supply, encompassing cash in circulation, savings accounts, time deposits, and money market funds, has consistently increased each month starting from February.

The combined action of China loosening its money supply significantly and the U.S. Federal Reserve reducing interest rates by 0.5% has boosted market confidence. However, this positive trend has been somewhat halted due to the rising conflicts in the Middle East.

Significantly, Societe Generale has reallocated all its commodity investments towards gold, primarily due to escalating geopolitical tensions and a softening overall commodity market trend.

The French bank boosted its gold reserves to account for 7% of its overall investment strategy, marking a substantial 40% increase from the previous quarter. This shift towards gold suggests a rising trust in gold as a secure investment choice during times of market turmoil and instability worldwide.

Read More

2024-10-02 00:42