.......think this is good news, but what do we know?
Yesterday's release of the December M2 money supply figures showed a continuation of the sub-6% growth trend that has been in place since inflation peaked in mid-2022. Despite over three years of very sluggish money growth, economic growth has exceeded most expectations. Why? Because money that was stockpiled during the Covid winter has been steadily released to fuel increased economic activity, while at the same time inflation has remained relatively low and federal deficits are shrinking.
The monetary and inflation fundamentals are pretty darn good these days, with the possible exception of the dollar, which has weakened on the margin in recent months. I am not worried about that, however, because the dollar remains substantially stronger than its long-term average in trade-weighted and inflation-adjusted terms. I'm not worried either about the surge in gold prices, which have recently surpassed $5,300/oz and appear to exist in an alternate universe. Abstracting from gold, commodity prices are well-behaved and show no sign whatsoever of inflationary behavior.
-as cut-and-pasted from the Calafia Beach Pundit
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