Where did all the dollars go? In 2020 and 2021, during COVID, the Fed drenched the economy with trillions of dollars of cheap money. As the chart below shows, M2 growth surged by 25% in 18 months, an unprecedented rise in money creation.

Why is anyone surprised – especially the Fed – that we saw the largest rise in consumer prices in almost half a century from all this money-printing?

But look at the last year. The supply of money has contracted by 4% from its all-time high back in late 2021.

Everyone has a different opinion of what this means for inflation going forward, but we would simply make the case that this herky-jerky monetary policy cannot be good for long-term growth of the US economy. We need a monetary rule with a STABLE valued dollar, not a Chairman of the Fed that makes up the rules as we go along.