EconomicsJunkie » true money supply

Money & Credit Supply – April 2010

Nima — Wed, 19 May 2010 02:10:30 +0000

In April of 2010 the annual growth rate of the true money supply has dropped to 3.68%.

The total true money supply at this point is $2,214 billion:

The money supply growth rate continues to move sideways and even appears to be on the verge of falling once again. One thing’s for sure: There is no extraordinary growth happening in the money supply, regardless how how many nonsensical purchase programs the Fed has started and how much “quantitative easing” it is trying to shove down people’s throats.

Consumer credit credit continues to contract steadily, ever since I called the peak in 2008:

This is part of what I meant when I called for a long lasting End of Consumerism:

The end of consumerism really means the end of capital consumption. It means that people realize that they need to save more and consume less, so as to provide for economic progress and more efficiency in the future, and to restore balance to the economy as a whole. It means that people have understood that too much of the existing capital stock has been consumed and has deteriorated.

This is the causality that the majority of pundits and economics professors that one can hear talk every evening on the news simply don’t understand. All their theories and policies are ignoring this one crucial fact: That Americans are done consuming for the foreseeable future. The end of consumerism isn’t just a temporary ditch. It is here and now and it won’t go a way for a long long time. It is a once in a lifetime occurrence. This is why it is so hard to grasp and to accept. But it is very simple to understand when one approaches it with sane common sense. How many more Starbucks branches do we need in the streets of New York? How many more gas guzzling cars should each family posess? Three, four, ten …? How many more different brands of detergents, shampoos, toothpastes, and consumer electronics products do we really need?

In particular have a look at the ride that securitized consumer loans have been taking since the beginning of the year!

Securitized consumer loans are more likely to be marked to market I think. This may be why we are getting a much clearer picture of the real extent to which credit is contracting here, but this is just speculation on my part.

After the mirage bump which was supposedly due to a regulatory adjustment of certain loans, total credit and loans continue to contract steadily:

Credit:

Loans:

Deflation is alive and well indeed!

Money Supply – February 2010

Nima — Sat, 13 Mar 2010 06:03:16 +0000

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?

Nima — Sun, 17 Jan 2010 04:02:26 +0000

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

Nima — Mon, 11 Jan 2010 05:49:40 +0000

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

Nima — Mon, 23 Nov 2009 05:17:45 +0000

The true money supply in October was $2,151 billion, up 7 percent from 1 year ago:

Money Supply – September 2009

Nima — Fri, 16 Oct 2009 08:11:40 +0000

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

Nima — Tue, 15 Sep 2009 08:56:15 +0000

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

Nima — Fri, 14 Aug 2009 06:06:49 +0000

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 – June 2009

Nima — Fri, 17 Jul 2009 04:28:47 +0000

Click on image to enlarge.

Compared to 1 year ago, the true money supply has grown by 16.14% to now $2.17 trillion.

Money Supply Growth – May 2009

Nima — Sun, 14 Jun 2009 02:36:32 +0000

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.