By one popular measure, the so-called M2, the US Money Supply is declining. However, by a broader count of the money in the financial system in America, known as the Odeon Cap Revised M3, the US money supply is expanding at a rapid pace, according to DICK BOVE, chief financial strategist at ODEON CAPITAL GROUP. That's one clear reason he now sees the Fed coming back with two further interest rate rises in 2023, underscoring the Fed's own outlook. At its most recent meeting, the Fed kept interest rates unchanged at a range of 5.0% to 5.25% but signalled the possibility of ratcheting up rates twice later this year. BOVE says once he examined the data more closely, he was convinced these rates are on the cards. "What Fed Chairman [Jerome] Powell says, is what he means, " says BOVE. "We will have two more rate rises in the Fed Funds rate [this year]."

Rising interest rates increases the chances for "breakage" in the US economy. Higher costs for capital and debt servicing could finally take its toll. A Federal Reserve Bank of New York report shows total US household debt of some $17.5 trillion. Credit card debt is escalating, hovering around $1 trillion. Business debt is at a record high. "We are overwhelmed with debt," says BOVE. "It is affecting the economy and the Fed." MAT VAN ALSTYNE, ODEON co-founder and managing partner, says the Fed is in a tough corner. "It seems to be waiting for something to break and nothing is breaking," he adds. The financial services side of the economy is "stressed," according to BOVE. Meanwhile, the US dollar's future as a reserve currency is debated following recent remarks on the greenback by Treasury Secretary, Janet Yellen. BOVE suggests the dollar ultimately faces an inexorable decline given the weight of history. JOHN AIDAN BYRNE, our host, disagrees. He says a decline is not a foregone conclusion and points out recent setbacks in efforts by China and others to undermine the greenback. VAN ALSTYNE says there is no viable alternative today to the dollar as the anchor, or globe's reserve currency.

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