Best of the Week
Most Popular
1. US Housing Market House Prices Bull Market Trend Current State - Nadeem_Walayat
2.Gold and Silver End of Week Technical, CoT and Fundamental Status - Gary_Tanashian
3.Stock Market Dow Trend Forecast - April Update - Nadeem_Walayat
4.When Will the Stock Market’s Rally Stop? - Troy_Bombardia
5.Russia and China Intend to Drain the West of Its Gold - MoneyMetals
6.BAIDU (BIDU) - Top 10 Artificial Intelligence Stocks Investing To Profit from AI Mega-trend - Nadeem_Walayat
7.Stop Feeding the Chinese Empire - ‘Belt and Road’ Trojan Horse - Richard_Mills
8.Stock Market US China Trade War Panic! Trend Forecast May 2019 Update - Nadeem_Walayat
9.US China Trade Impasse Threatens US Lithium, Rare Earth Imports - Richard_Mills
10.How to Invest in AI Stocks to Profit from the Machine Intelligence Mega-trend - Nadeem_Walayat
Last 7 days
IBM - Investing in AI Machine Intelligence Stocks - 25th May 19
Seasonal Dysfunction: Why Generations of Gold and Silver Investors Are Having Such Difficulty - 25th May 19
Employment - The Good and the Bad of Job Automation - 25th May 19
Gold Mining Mid-Tier Stocks Fundamentals - 25th May 19
Buy This Pick-and-Shovel 5G Stock Before It Takes Off - 25th May 19
China Hang Seng Stocks Index Collapses and Commodities - 24th May 19
Costco Corp. (COST): Finding Opportunity in Five Minutes or Less - 24th May 19
How Free Bets Have Impacted the Online Casino Industry - 24th May 19
This Ultimate Formula Will Help You Avoid Dividend Cutting Stocks - 24th May 19
Benefits of a Lottery Online Account - 24th May 19
Technical Analyst: Gold Price Weakness Should Be Short Term - 24th May 19
Silver Price Looking Weaker than Gold - 24th May 19
Nigel Farage's Brexit Party EU Elections Seats Results Forecast - 24th May 19
Powerful Signal from Gold GDX - 24th May 19
Eye Opening Currency Charts – Why Precious Metals Are Falling - 23rd May 19
Netflix Has 175 Days Left to Pull Off a Miracle… or It’s All Over - 23rd May 19
Capitalism Works, Ravenous Capitalism Doesn’t - 23rd May 19
The Euro Is Bidding Its Time: A Reversal at Hand? - 23rd May 19
Gold Demand Rose 7% in Q1 2019. A Launching Pad Higher for Gold? - 23rd May 19
Global Economic Tensions Translate Into Oil Price Volatility - 22nd May 19
The Coming Pension Crisis Is So Big That It’s a Problem for Everyone - 22nd May 19
Crude Oil, Hot Stocks, and Currencies – Markets III - 22nd May 19
The No.1 Energy Stock for 2019 - 22nd May 19
Brexit Party and Lib-Dems Pull Further Away from Labour and Tories in Latest Opinion Polls - 22nd May 19
The Deep State vs Donald Trump - US vs Them Part 2 - 21st May 19
Deep State & Financial Powers Worry about Alternative Currencies - 21st May 19
Gold’s Exciting Boredom - 21st May 19
Trade War Fears Again, Will Stocks Resume the Downtrend? - 21st May 19
Buffett Mistake Costs Him $4.3 Billion This Year—Here’s What Every Investor Can Learn from It - 21st May 19
Dow Stock Market Trend Forecast 2019 May Update - Video - 20th May 19
A Brief History of Financial Entropy - 20th May 19
Gold, MMT, Fiat Money Inflation In France - 20th May 19
WAR - Us versus Them Narrative - 20th May 19
US - Iran War Safe-haven Reasons to Own Gold - 20th May 19
How long does Google have to reference a website? - 20th May 19
Tory Leadership Contest - Will Michael Gove Stab Boris Johnson in the Back Again? - 19th May 19
Stock Market Counter-trend Rally - 19th May 19
Will Stock Market “Sell in May, Go Away” Lead to a Correction… or a Crash? - 19th May 19
US vs. Global Stocks Sector Rotation – What Next? Part 1 - 19th May 19
BrExit Party EarthQuake Could Win it 150 MP's at Next UK General Election! - 18th May 19
Dow Stock Market Trend Forecast 2019 May Update - 18th May 19
US Economy to Die a Traditional Death… Inflation Is Going to Move Higher - 18th May 19
Trump’s Trade War Is Good for These 3 Dividend Stocks - 18th May 19
GDX Gold Mining Stocks Fundamentals Update - 17th May 19
Stock Markets Rally Hard – Is The Volatility Move Over? - 17th May 19
The Use of Technical Analysis for Forex Traders - 17th May 19
Brexit Party Set to Storm EU Parliament Elections - Seats Forecast - 17th May 19
Is the Trade War a Catalyst for Gold? - 17th May 19
This Is a Recession Indicator No One Is Talking About—and It’s Flashing Red - 17th May 19
War! Good or Bad for Stocks? - 17th May 19
How Many Seats Will Brexit Party Win - EU Parliament Elections Forecast 2019 - 16th May 19

Market Oracle FREE Newsletter

U.S. House Prices Analysis and Trend Forecast 2019 to 2021

Monetary Watch December 2010: The Money Supply, a Triple From Here?

Interest-Rates / Money Supply Dec 22, 2010 - 11:22 AM GMT

By: Michael_Pollaro

Interest-Rates

Best Financial Markets Analysis ArticleOur monthly Monetary Watch, an Austrian take on where we are on the monetary inflation front and what’s next…


Headline Monetary Aggregates in November

The U.S. money supply aggregates based on the Austrian definition of the money supply, what Austrians call the True Money Supply or TMS, were mixed in November, with our shorter-term one and three-month rate of change metrics continuing their recent surge while our longer-term twelve-month rate of change metrics showing some moderation. Focusing on TMS2, THE CONTRARIAN TAKE’s preferred money supply measure, we find that it increased at an annualized rate of 15.6% in November, bringing the three-month rate of change to an annualized 15.2%. That’s up from October’s 14.5% rate and 13.3% rate, respectively. In contrast, the twelve-month rate of change metric on TMS2, the measure we watch most closely, went the other way, ending November at a rate of 9.8%, down from October’s 10.5% rate, and marking the end, albeit barley, of 22 consecutive months of double digit increases.

As has been the case throughout 2010, M2, the mainstream’s favorite monetary aggregate, continues to show subdued growth, in November posting a year over year rate of increase of 3.1%, down from October’s 3.2%. As readers of this site are aware, THE CONTRARIAN TAKE posits M2 as a grossly misleading measure of the money supply, meaning the gap between the true and the perceived rate of monetary inflation is a healthy 6.7 percentage points.

A Return to Double Digit Increases in the Offing?

We must say that we were a bit surprised by that 9.8% twelve-month rate of change print on TMS2. As we argued in last month’s Monetary Watch, we were expecting TMS2’s 22-month string of double digit rate of change increases to continue well into 2011. Yes, it fell short by only 2 bps, but double digits it was not. We do think though that a return to double digit rate of change increases are in the cards, for three reasons…

First, the recent surge in TMS2 – up an annualized 10% the past six months and 15.2% the past three – should be supportive of higher twelve-month rate of change increases over the coming months.

Second, the full impact of the Federal Reserve’s QE II asset purchase program was not felt in the money supply aggregates. Coming as it did mid-month, plus what appears to be a larger than projected draw-down in the Federal Reserve’s Agency portfolio, QE II yielded an annualized impact of just $600 billion in November instead of the projected $900 billion.

Third, and most important, private banking institutions are not only continuing to print money, but appear to be doing so at an accelerating rate. In fact, Uncovered Money Substitutes, i.e., bank deposit liabilities not covered by bank reserves, the issuance of which is the result of the banking systems’ efforts to lever up its loans and investments on top of what is currently a mountain of excess reserves, is growing at a year over year rate of 19.9%, a post credit crisis high.

Read the rest of the article

By Michael Pollaro

Michael Pollaro writes a column called THE CONTRAIAN TAKE at True / Slant.com, its mission statement to present thoughts and ideas on important financial market and economic trends from the perspective of a free-market, Austrian economist.

Michael Pollaro is a retired Investment Banking professional, most recently Chief Operating Officer for the Bank's Cash Equity Trading Division. He is a passionate free market economist in the Austrian School tradition, a great admirer of the US founding fathers Thomas Jefferson and James Madison and a private investor.

Website: http://trueslant.com/michaelpollaro/ Email: jmpollaro@optonline.net

    Copyright © 2010 Michael Pollaro - All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules