20 December 2016

Update on money supply growth

The graph below shows growth in Corrected Money Supply (my version of money supply) from January 2005 to October 2016.

From January 2014 it fell continuously and showed every sign of falling below the zero mark. But the plunge stabilised in January 2016 and has been mostly growing steadily since April. In October, the latest for which data can be calculated, the growth rate stood at 7.8%.

The reversal looks similar to that which took place in 2013 but that was owing to the Fed's QE. This time there is no QE and in fact the Fed is slowly winding down its balance sheet.

The proper comparison may be with the reversal in growth that took place from the start of 2007 and went on until the recession began. In that episode the growth in money supply may have been because of money exiting the housing market and waiting to be invested in other asset markets. This time too the growth of money supply may be caused by money exiting some asset market (possibly bonds) and being invested elsewhere. Will a crash follow soon?


Category: Economics


Categories
Search-Engines
Google
Mobile-Sites
Income-Tax
Miscellaneous
Communism
Internet
Economics
Kerala
Books
Mathematics
Science
Archives
December 2016
October 2016
August 2016
July 2016
April 2016
March 2016
January 2016
December 2015
November 2015
October 2015
September 2015
August 2015
June 2015
May 2015
February 2015
November 2014
October 2014
August 2014
May 2014
April 2014
December 2013
October 2013
July 2013
May 2013
January 2013
November 2012
October 2012
August 2012
July 2012
June 2012
May 2012
March 2012
February 2012
January 2012
December 2011
November 2011
August 2011
July 2011
June 2011
May 2011
April 2011
March 2011
August 2010
October 2009
May 2009
June 2008
March 2008
February 2008
January 2008
December 2007
August 2007
June 2007
May 2007