Aug

11

This is a lot less exciting that Bob Prechter, but have any readers noticed that M2 has suddenly started accelerating ; and M1 is picking up again too?

From last Thursday's Fed report:

13 week annualized rate of change: M1=14.2% M2=9.0%

26 week annualized rate of change: M1=14.0% M2=7.2%

52 week annualized rate of change: M1=13.6% M2=6.3%

Perhaps this is somehow related to money moving into banks ahead of the US Government default deadline? If so, we should see it start to reverse in tonight's report.

But if not….??

("Inflation is always and everywhere a monetary phenomenon.")

Rocky Humbert followed up Thursday night:

Following up on my original post (which pre-dates the ZeroTruth Post ), there was no sign of a decline in either M1 or M2 in yesterday's numbers. The revised growth rate is:

13 week annualized rate of change: M1=16.2% M2=10.1%

26 week annualized rate of change: M1=14.2% M2=7.8%

52 week annualized rate of change: M1=14.3% M3=6.6%

I'm going to offer a new (unproven) hypothesis: Can the ongoing spike in US M2 be explained by cash flowing out of European banks and flowing into American banks (as a safe haven?)

That is, is it possible that the M1/M2 spike is actually a European bank run?

I was unable to find any real-time ECB monetary statistics. Here's the ECB monthly data (last updated in May) … which shows a 2.2% growth in their M3.

Does anyone know if the ECB has more current monetary statistics?

Lastly, this is a question for monetary economists: Is it possible to have money supply collapsing in Europe and money supply spiking in the USA? And if so, what is the theoretical effect on the exchange rate?


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  1. David Ricardo on August 13, 2011 3:20 am

    >>>>>
    Yes indeed but only at full employment or full capacity. I don’t think that in the current situation an increase in the money supply will cause an increase in the price of housing, the price of labor or a general increase in prices for there’s much slack capacity in many sectors of the economy.
    Ceteris Paribus.
    David Ricardo

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