True Money Supply May 2012

It’s been a while since I posted the last update on the US Money supply (true money supply), so here it goes:

The true money supply has grown to $2,731 billion:


The annual growth rate is currently at 13.62 percent:


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US Money Supply – December 2010

The true money supply in December 2010 has grown to $2,345 billion, the annual growth rate has gone up to 5%.



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True Money Supply – July 2010

The true money supply in July has dropped again slightly from $2,213 to $2,200 billion:


The annual growth rate remains below 2% at currently 1.82%:


Historically, the true money supply is a helpful indicator in predicting recessions and booms. A sustained growth rate below 3% tends to portend recessions, while one above 3% tends to result in speculative booms of one or the other kind.

In hindsight over the past 3 years, it looks like the true money supply has once again been a good guide in predicting mid term trends, in particular the recession of 2008 and the reflation of 2009 which has now obviously come to an end.

But fluctuations in the money supply don’t change the fact that deflation is here and has been here for a while, and it’s not going away anytime soon.

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Money & Credit Supply – April 2010


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:



Deflation is alive and well indeed!

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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%.

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