M1's decline as severe as during the Great Depression

 Here, I showed a chart of real (= inflation-adjusted) US M1.  The unadjusted version is as interesting.

As you can see, nominal (i.e., not adjusted for inflation) M1 is falling as fast as it did during the Great Depression (1929-1933).  It fell then because banks failed, and when that happened, their deposits were written off, causing money supply to fall.  It's happening now because The Fed is allowing its book of government bonds bought during the Covid Crash to run off without replacing them.   When that happens, the money it receives is extinguished (central banking is complicated to explain!) and so the money supply is reduced.  

The huge surge in money supply during Covid led to an economic boom (though fiscal stimulus exacerbated the boom) and a jump in inflation to 40-year highs.  Of course, there's never just one factor---inflation was worsened by the invasion of Ukraine, by a surge in commodity prices, and by supply chain hiccoughs.  However, there is no doubt in my mind that massive monetary stimulus in the form of zero interest rates plus quantitative easing helped overstimulate the economy and worsened inflation.   

Now the situation is reversed.  Interest rates have risen the fastest in 40 years, and money supply is falling as fast as it did in the Great Depression.  It is of course possible that neither of these two factors will lead to recession.  But, alas, it seems very unlikely.  

We must be alert to the possibility that the Fed's redefinition of money supply to include liquid interest-bearing deposits has changed its behaviour, but you would have expected the effect to be the other way, as precautionary motives and rising interest rates led to an increase in interest-bearing liquid assets.  But M2, which includes money market funds, is also falling faster than at any time in the last 60 years, though not as fast as M1.