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America offers the backdrop for global economic trends


As the impact of the pandemic recedes in the United States, money supply growth is sharply increasing, commodity prices are rising, and government spending is surging. The combination of these things has meant the rise of inflation fears and markets have been in the grip of a ‘taper scare’ for several weeks now. Cryptocurrencies have emerged as the hedging commodity of choice.

Last March, as the pandemic began, the US Federal Reserve lowered its Fed funds target rate to between 0% and 0.25%. It restarted its quantitative easing (QE) programme and expanded QE purchases to an unlimited amount. The Fed’s balance sheet has grown from about $4 trillion right before the pandemic’s onset to about $7.9 trillion as of last week. For context, the Fed’s balance sheet rose by about $3 trillion from $1 trillion over a five-year period after the global financial crisis (GFC) in 2008. US M2 money supply has grown by a seasonally-adjusted…

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