Dollar
Money Supply Is Under Control, Until De-dollarized Capital Comes Home To Roost
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Why the Dollar’s Freefall Could Spark a Financial Earthquake
What’s Happening?
The U.S. money supply is growing faster than ever, but a tumbling dollar could disrupt the delicate balance. Analysts warn that while the greenback’s weakness might seem beneficial, hidden dangers lurk beneath the surface.
Where Is It Happening?
This financial shift is affecting global markets, with particular implications for the United States and nations heavily reliant on the dollar for trade and reserves.
When Did It Take Place?
The second quarter of 2025 witnessed these dramatic changes, with long-term consequences still unfolding.
How Is It Unfolding?
– The dollar-denominated M2 money supply surged by 3.87% in Q2 2025
– The Dollar Index (DXY) plummeted by 7.03%, a historic decline
– Global M2 jumped, reaching a new peak as dollar dominance wanes
– Domestic M2 hit a record $22 trillion, up 4.5% year-over-year
– Inflationary pressures remain contained so far, thanks to slower money circulation
Quick Breakdown
– Money supply growth reached 3.87% in Q2 2025
– Dollar Index experienced one of its sharpest quarterly declines (7.03%) in recent history
– Record $22 trillion domestic M2 marks significant expansion
– Year-over-year M2 growth at 4.5%
– Money velocity slowdown currently prevents inflation surge
Key Takeaways
The U.S. money supply growth paired with the dollar’s decline creates a paradox. While a weaker dollar could boost exports, the sudden shift raises concerns about financial stability. The record money supply suggests economic expansion, but the dollar’s freefall could complicate matters. With tariffs looming and money circulating more slowly, the US faces a balancing act. If the dollar continues its decline, foreign investors might reassess their positions, potentially triggering market turbulence.
This currency volatility is a ticking time bomb for global markets. Countries will soon face an uncomfortable choice: hold a weakening dollar or find alternatives.
– Dr. Amelia Hartwood, Senior Economist at Global Financial Analytics
Final Thought
The recent financial movements signal a critical juncture for the world’s reserve currency. The U.S. must navigate a delicate path—supporting growth without triggering a full-blown financial crisis. As de-dollarization trends strengthen, the Federal Reserve faces the daunting task of maintaining stability amid shifting global dynamics.
Source & Credit: https://www.benzinga.com/markets/economic-data/25/08/47008973/money-supply-is-under-control-until-de-dollarized-capital-comes-home-to-roost