Latest / Monetary Policy Explained with Fexingo: Central Banks, Money Supply, and Interest Rates
Why Central Banks Still Care About the Money Supply
Episode 3 of Monetary Policy Explained with Fexingo tackles a surprisingly controversial question: does the money supply still matter? After decades of de-emphasizing M2 and other aggregates, central banks are paying attention again. Lucas and Luna walk through the revival of monetary analysis, using the post-2022 spike in M2 and the subsequent sharp decline as the case. They explain why the Fed and ECB are now watching money growth closely — even if they don't target it — and what the collapse in broad money growth in 2023-2024 might signal for inflation and recession risks. A concrete…
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