Money Supply – March 2010; Supplemetary Financing Revived
Money Supply
The true money supply in March has grown slightly to $2,202 billion in March:
The annual growth rate has, however, dropped to 3.85% now:
Fed & Treasury Revive Supplementary Financing
For a little while the Treasury has been winding down its mysterious supplementary financing program.
Now, after Congress has, as always, made way for more public debt by raising the ceiling, the program is being revived:
The Treasury Department announced Tuesday that it is expanding its Supplementary Financing Program to help the Federal Reserve manage its enormous balance sheet. In a statement, Treasury said it will boost the SFA to $200 billion from its current level of $5 billion. The fund had been up to $200 billion but was scaled back when Congress delayed passage of an increase in the debt limit. Now that an expansion of the debt limit has been signed into law, the department is able to resume the program. Starting on Wednesday, Treasury will conduct the first of eight weekly $25 billion 56-day SFP bills to restore the program. The department said it will then roll the bills over. “We are committed to work with the Fed to ensure they have the flexibility to manage their balance sheet,” a Treasury official said.
I’m not sure if this really means anything to anybody. Maybe I am just not getting something here. But I would love for somebody from the Treasury or the Fed to explain to me what precisely they mean by working “with the Fed to ensure they have the flexibility to manage their balance sheet”.
Obviously something shady is going on here when they have to use such complicated constructs and fuzzy terminology.
Credit and Loans
What has been most noteworthy recently was the following development in the supply of credit and loans during the last week or March:
The last time such a severe spike occurred was in October of 2008, to no avail as credit relapsed afterwards along with a severe market crash … a pattern which is only too likely to repeat itself at this point.
Update: I just chatted with Mish about this and he told me that this recent spike is likely to be just a technicality that is due to some reclassification of some student loan.
Money Supply – February 2010
The true money supply has dropped by $72 billion from $2,253 billion in January to $2,181 billion in February 2010.
The annual growth rate has again leveled off to now 5.5%.
Money Supply – December 2009 – Early Double Dip Recession Signs?
The true money supply has grown to $2,232 billion in December 2009.
The annual growth rate has now slowed down to 3.2%:
A sustained drop below 3% is most of the time a good recession indicator. Given that we are still in a recession which may be declared over soon, this may be just another indicator of the coming double dip recession, as I have outlined a few days ago.
Money Supply – November 2009
The growth rate of the true money supply has slowed down to 6.68 percent in November 2009.
Below is the actual amount of money in circulation over the past months till now:
Below please find a charge of the true money supply growth rates since 1930:
The red areas indicate recessions. As I have mentioned before the growth rate of the true money supply tends to be a relatively reliable indicator of coming recessions whenever it drops below 3 percent.
Note the area between 1930 and 1940: The Great Depression, an obvious result of the government’s previous inflation and credit expansion policies and the ensuing business cycle, was accompanied by a decline in the money supply. In 1933 the true money supply spiked up through 1936 only to contract again in the recession of 1937/38. The pattern that is currently panning out may very well be following that one in one way or another. It is certainly likely that soon an official end to the recession will be declared. Another one is likely to follow quickly, attempting to correct all the malinvestments that will have been created or left uncorrected by the recent and ongoing bailout and stimulus policies.
The government’s response to that coming recession is of course predictable. What exactly it will lead to no one knows, except that it won’t be good at all. The recession of 1938 was closely followed by World War II …
Money Supply – October 2009
The true money supply in October was $2,151 billion, up 7 percent from 1 year ago:
Money Supply – September 2009
The true money supply has fallen by $11 billion from August to September to now $2,133 billion:
This is the 4th monthly decline straight.
The annual growth rate has dropped to 10%:
One more noteworthy item in this month’s money supply data: The Treasury’s “Supplementary Financing Account”, after 6 months of maintaining a constant level of $200 billion, has now dropped to $191 billion. I believe this may be yet another sign that the Fed’s efforts to wind down the monetary stimulus have already begun behind the scenes.
This, along with an ongoing and accelerating credit contraction, will be forces blowing in the face of all futile attempts to reflate the bubble.
Money Supply – August 2009
Click on image to enlarge.
The true money supply has fallen from $2,157 billion in July 2009 to $2,140 billion in August 2009, a drop of $17 billion. Compared to one year ago it has still grown by 13.6% but the growth rate is coming down from recent highs.
This is a chart of the money supply itself, on a monthly basis:
Click on image to enlarge.
Money Supply Growth – July 2009
The true money supply has dropped to $2.157 trillion in July 2009 from $2.172 in June 2009. It is still up 14% from 1 year ago, but annual growth has slowed down from 15.3% in June.
Money Supply Growth – May 2009
The true money supply has dropped from $2.135 trillion to $2.123 trillion, but is still up 13.07% when compared to one year ago.
Money Supply Growth – March 2009
Click on image to enlarge.
In March 2009 the true money supply has gone up by 14.27% when compared to March 08. It has now reached $2.116 trillion.
Community Activity- EconomicsJunkie posted an update in the group Philosophy: I changed point 8 in my UPB summary as follows, after some feedback: 8. Universally [...] April 25, 2010
- EconomicsJunkie and Will Moyer are now friends April 22, 2010
- Bivi joined the group Philosophy April 22, 2010
- EconomicsJunkie posted an update in the group Philosophy: I participated in the last call in show on Freedomain Radio ... http://www.freedomainradio.com/Traffic_Jams/FDR_1644_Sunday_Show_18_Apr_2010.mp3 - had [...] April 21, 2010
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