alt Hacker News>slowing M2 growth to near zero and eventually reversing it.
The M2 money supply went from 15.4b at the start of 2020 to a peak of 21.7b, before slightly reversing to 20.7b. Then they just continued printing. Now it currently stands at a record high of 22.2b. The dollar is more diluted than ever.
its a tight rope. shrinking the money supply also has downsides.
Summary of the Policy Reversal Period Policy Action Balance Sheet Impact
June 2022 – Nov 2025 QT (Tightening) Shrank from ~$9T to ~$6.5T
Dec 1, 2025 QT Ends Runoff stops; maturing assets reinvested
Dec 12, 2025 – 2026 Reserve Management Expansion begins via T-bill purchases
By December 1, 2025, the Fed officially halted QT after reducing its balance sheet by approximately $2.4 trillion. The following factors forced the reversal to expansion: 1. Liquidity Squeeze and Repo Market Stress As the Fed drained cash from the system, bank reserves fell toward "critical thresholds". This caused stress in the overnight repo market, where banks lend to each other. Spiking Rates: Key short-term lending rates, such as the Secured Overnight Financing Rate (SOFR), spiked above the Fed’s target range, indicating cash was becoming scarce.