The Coming Deflationary Depression & Why We Should Pay Attention to QT and the Money Supply

Experts are warning of a potential deflationary depression in the coming years, thanks to the contraction of money supply. But what does that mean in plain English?

What Is Deflationary Depression and Why Should We Worry?

In plain English, deflationary depression is a period of economic decline in which the growth and availability of money is negligible. This type of economic decline, while similar in many ways to other economic downturns and depressions, is usually considered to be more serious, since it deals with the money supply itself and not just the cyclical fluctuations of the markets.

When the money supply contracts, it can reduce consumption, investment, and borrowing, leading to stagnation in economic growth, increased unemployment, and lower wages.

What Causes Deflationary Depressions?

Deflationary depressions are usually caused by a decrease in aggregate demand, which can be a result of a sudden shift in monetary policy, such as when the Federal Reserve or other central banks reduce the money supply or increase interest rates.

One of the key indicators of a possible deflationary depression is called Quantitative Tightening (QT). According to some experts, when a central bank starts to reduce the money supply (QT), it can lead to a decrease in inflation and a decrease in economic growth, which can ultimately lead to a contraction of the money supply and a deflationary depression.

What Can We Do to Prevent a Depressive Deflation?

So what can we do to prevent a deflationary depression? One of the key things we should do is to pay attention to the money supply and to pay attention to what’s going on with quantitative tightening (QT).

It’s also important to be aware of the potential impact of lower inflation. Lower inflation can lead to a contraction of the money supply, as well as a decrease in spending, borrowing, and investment.

Finally, it’s important to be aware of the potential impact of trade wars and increasing tariffs. Trade wars can lead to a decrease in demand for goods and services, which can lead to a decrease in money supply.


A deflationary depression can be an incredibly serious economic downturn, with potentially devastating consequences for both individuals and entire economies. That’s why it’s important to pay attention to quantitative tightening (QT) and the money supply. That way, we can take steps to mitigate the risk of a deflationary depression and keep our financial system running smoothly.

So, let’s all stay vigilant and be on the lookout for a deflationary depression! Let’s hope we never have to experience one!