M1 money stock is growing at a whopping 357% year-over-year as M1 velocity has collapsed to an anemic 1.22.
M2, a broader measure of money, is growing at 27.1% year-over-year with a dismal velocity of 1.135.
Since velocity equals GDP divided by money, The Federal Reserve had better hope that GDP does increase with the trillions that the Biden Administration is throwing at the problem. But since higher taxes won’t be realized for at least a year, there will be even more money printing.
The Treasury markets are getting blasted like in Mel Gibson’s Mad Max Beyond Thunderdome.
(Bloomberg) — The popularity of one Federal Reserve overnight deposit facility has surged as investors look for shelter from negative rates in short-term markets, which are under unusual pressure over quarter-end thanks to the flood of cash in the system.
Usage of the overnight reverse repurchase facility surged to $104.7 billion on Tuesday, the most since last April, according to data from the New York Fed. It pays an overnight rate of 0% — well above the minus 0.05% available at Tuesday’s close in the general collateral market — helping to temporarily reduce the quantity of reserve balances in the banking system.