Friday, February 27, 2009

Bernanke Continues with His Pedal to the Metal

3 month annualized M2 nsa money growth continues at an incredibly rapid rate. Through the week of February 16, the growth was 14.7%. Thus, I fully expect a "recovery" in the economy to occur much sooner than most expect. I hasten to add that, although traditional economic data will turn positive, because the "recovery" is fueled by money printing, it will distort the structure of the economy and set the stage for further crisis down the road, including the possiblty of near runaway inflation.

3 month annualized M1 nsa continues to decline, with the latest Fed data showing a decline of 8.6%. The decline, especially this time of year, is not fully unexpected, given that this data (3 month) goes up against the start of the Christmas season where there is a strong demand for cash. That said, the decline also probably reflects further easing of panic in the system, as the demand deposit component of M1 declined by $15 billion from last week.


  1. @ Tsundre

    Money supply is going to tell the story. Bank credit could be down because banks are writing down their old bad credit.

    They for example may have pumped a billion of new credit into the system, but wrote down three billlion of former pumping, and it may look as though two billion was withdrawn from the systemy when, in fact, it is really an add of a new billion.