Money supply, in vogue again?

[ASusilovic]

...

Some economic forecasters and strategists are pointing to a steep five-month rise in the amount of money held as indicating that a recovery in the U.S. economy is slowly but surely getting under way.

...

In January, the M2's annualized growth rate over the previous three months jumped to nearly 18%. In August, the three-month average growth rate was less than 3%.

...

Usually, Callahan says, it takes six to nine months for a pickup in money supply to take effect. That would mean a turnaround is already under waz.

http://www.marketwatch.com/news/sto...FFC6-4B48-AEFD-0F54FA406F2D}&dist=SecMostRead

6-9 month. Maybe worth buying some DEC calls...?

 

[makloda]

Interesting how that guys chart handily only goes back to the 60s, not to the 30s. The money supply growth rate skyrocketed in the 30s but didn't induce much growth.

"If you turn up the heating at home in the winter, but the windows are open it won't get much warmer":

 

[nazzdack]

Quote from makloda:
Interesting.......

The severity of the economic contraction will correspond to the severity of the military conflict that WILL follow afterwards. We'll see. :eek:

 

[RiceRocket]

This issue isn't really about the money supply. It's about the supply of credit. Securitization allowed banks to lever credit 10 to 1 with fractional reserve lending which they then sold the normal leveraged loans to MS, BSC, LEH, GS, C etc. Then the investment banks re-bundled these loans leveraged at 30 to 1. The purchasers of these CDO's borrowed from future earnings to pay for them. Thus, this process created an enormous inflation of credit, beyond what we have ever seen, even in the 1920's. Now, we have the federal reserve printing money to try to fill the gap, but the gap is so huge, 100's of trillions, that there's no way to print enough money to re-ignite monetary inflation to offset the deflating credit bubble. That's why you see the TALF. The fed is trying to re-ignite the securitization market by backstopping it. Overall, that's why we see such delay in any solutions from the government at this point, they aren't really sure if anything will re-create securitization at a level that will offset the deflating credit.

 

[Landis82]

The growth of the money supply is MEANINGLESS unless you look at the VELOCITY of money.

Vt - nT/M

http://en.wikipedia.org/wiki/Velocity_of_money

 

[Daal]

Quote from makloda:

Interesting how that guys chart handily only goes back to the 60s, not to the 30s. The money supply growth rate skyrocketed in the 30s but didn't induce much growth.

M1 and M2 went down

 

[scriabinop23]

Quote from nazzdack:

The severity of the economic contraction will correspond to the severity of the military conflict that WILL follow afterwards. We'll see. :eek:

The world will be ripe for a destructive ideologue or two to take power in the next few years if the central banks & govts don't get a handle on this.

 

[coolraz]

Quote from scriabinop23:

The world will be ripe for a destructive ideologue or two to take power in the next few years if the central banks & govts don't get a handle on this.

Obama? ; )

 

[allaboutmoney]

Quote from RiceRocket:

Now, we have the federal reserve printing money to try to fill the gap, but the gap is so huge, 100's of trillions, that there's no way to print enough money to re-ignite monetary inflation to offset the deflating credit bubble.

there is no such thing as "a too big of a gap that the fed can't fill"

100's of trillions! ????

would you care to explain what the result of this debt destruction will possibly be and how far can it go till eventually the dollar collapses?

 

[coolraz]

I would like to see about 10-15% per year inflation so that my fixed rate student loans gets wiped out fast....

so please mr. goverment, print more money !