The "New Normal"

Matthew Allgood |

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The dramatic surge in the money supply (M1) since 2020 — rising fivefold and peaking in 2022 — has left a lasting impact. M1 represents the most liquid forms of money: cash, checking deposits, and similar funds readily available for spending. Nearly 80% of all dollars in circulation were created in the last five years, largely in response to pandemic-driven disruptions. 

This flood of money fueled inflation and enabled speculative assets, even those without intrinsic value, to skyrocket. While the Fed now aims to shrink the money supply gradually, the RiskFirst® process helps clients confidently navigate this “new normal,” focusing on risk management to adapt to shifting markets.

The “New Normal”

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Sources: FRED, Bloomberg, Redwood. As of 12/10/2024. Date Range 1/1/1960 – 10/31/2024. For illustration purposes only.

Regards,

Allgood Financial

Disclosure: This piece is for informational purposes only and contains opinions of Redwood that should not be construed as facts. Information provided herein from third parties is obtained from sources believed to be reliable, but no representation or warranty is made as to its accuracy or completeness. Charts and graphs are for illustrative purposes only. Discussion of any specific strategy is not intended as a guarantee of profit or loss. Past performance is not a guarantee of future results. The objectives mentioned are not guaranteed to be achieved. Investors cannot invest directly in any of the indices mentioned above. Diversification of asset class is not a guarantee against loss.

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