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.