Why M1 Money Supply (Cash) is Skyrocketing Like No Time History
Why M1 Money Supply (Cash) is Skyrocketing Like No Time History by David Haggith for The Great Recession
In my last Patron Post, which I eventually made available to everyone, I revealed a little-known (at the time) fact that M1 money supply (the most liquid forms of cash — bills, checks and basic savings accounts) had grown faster than any time in history. I showed that using a graph like the following, which is now brought up to the most current data:
With part of December now in the picture, you can see the faintest hint at the top of the steep late-November climb that shows the climb may be rounding off.
That is a massive amount of new cash money — historically massive — done almost covertly in the quickest burst ever — and yet it did not even cause the stock market to blink!… The graphs … make it clear why inflation under the new regime could become a much more serious problem than the limp moves seen over all the years of the Great Recovery, the difference being how fast the Fed’s QE is now converting into cash
… and I asked,
Why did such an enormous surge in money supply happen in the last two weeks of November with no financial articles being written about it and no statements from the Fed about it? What is going on behind the scenes at the Fed and/or US treasury right now?
…and I promised I would look into and get back to you on it.
I think that I may have found a couple of answers, so I am getting back to you on that as promised.
This could be due to Biden’s promised termination of tax welfare to the rich
The first answer is my own surmising based on an article I just read about major tax-planning moves that are happening now in anticipation of Joe Biden’s promise finally to curtail the massive welfare to the rich that has gone on since the Reagan era (as the core of Reaganomics) in the form of that special tax cut they benefit from almost exclusively — the special capital-gains tax rate that is lower than tax on regular income.
As I’ve said many times on this site, the special cap-gains tax rate — more than any other cause — is why we have such huge growth in disparity between the rich and the rest. Capital gains are where the top 10% make most of their money — not in wages like the rest of the populace — yet they pay a much lower rate on that kind of income-earning than the much of the middle class pays on their kind of income.
Biden has promised he will end this obscene social welfare program that has been deepening the social divide in this nation for decades. That prospect has the top ten percent, and especially the one percent, scrambling for cover!
Rich Americans Who Fear Higher Taxes Hurry to Move Money Now
Rich Americans are rushing to make large transactions before the end of the month, trying to get ahead of any moves next year by President-elect Joe Biden and Democrats in Congress to raise taxes or close loopholes.
Some advisers say they’re busier than ever in the last weeks of 2020, especially with helping clients transfer wealth to the next generation tax-free while they still can. Appraisers, who are crucial for valuing assets used in these estate planning strategies, have been inundated….
It stands to reason that the richest of the rich and even just the regular rich are scared their overinflated lives will take a hit now that they see almost forty years of tax welfare possibly coming to an end. So, they are, like never before, scrambling to cover their asses — excuse me, convert their assets. The process of selling assets now while the gains realized on those assets can still be taxed at a much lower rate is bound to raise a lot of interim cash.