Money Supply Watch: Fear Continues; Fed Countering With Money Printing

There's a battle between fear and the Fed. Fed money printing is likely to win out in the long run.

M1 nsa for the week ended November 3 increased by $42.5 billion. This indicates that fear remains in the system. It is unlikely we will see a rebound in the economy until individuals stop pulling money out of other money components and putting the funds in cash and checking accounts, i.e. M1.

However, M2 nsa also increased for the week. It climbed by $45.6 billion. The Fed is clearly in money printing mode (as opposed to the slowdown this summer). The M2 money growth rate is now expanding week after week. The annualized growth for the last three months is almost at double digits at 9.89%.

If this growth in M2 is sustained, the downturn will end much sooner than most expect.