Saturday, 2 February 2013

Rapid Increase in Base Money, Movements in the U.S Monetary Base and Money Supply (as of 23 Jan-13)

Base money (monetary base) increased rapidly for the second period in a row according to bi-weekly data released by FRED on 1 February 2013 for the period ending 23 January 2013. The increase brought base money 3.35% higher than the USD 2.7054 trillion reported two weeks ago to USD 2.7960 trillion this week (see separate report for the money base). Following the 2.75% increase two weeks ago, base money has now already increased 6.2% this year. Compared to the same period last year, base money increased 4.20%. M1 increased 1.40% compared to two weeks ago and was 11.94% on last year while M2 decreased 0.47% for the bi-weekly period, but increased 7.45% compared to the same period last year. It represented the 42nd consecutive bi-weekly period of YoY growth of more than 6.0% for the M2 money supply. 

Monetary Base
The Monetary Base increased 3.35% for the bi-weekly period. At USD 2.7960 trillion it was the highest base ever reported beating the previous all-time high set on 22 February 2012. The base was up by 4.20% compared to the same period last year.

M1 Money Stock/Supply
The M1 Money Stock was up 1.40% for the bi-weekly period and ended the week on USD 2.4631 trillion. Compared to the same period last year, M1 increased 11.94%.

M2 Money Stock/Supply
M2 Money Stock decreased 0.47% for the bi-weekly period and ended the week on USD 10.4311 trillion. Compared to the same period last year, M2 was up by 7.45%.

M1 Multiplier and M2/Base ratio
The M1 multiplier remains considerable lower than it was during 2007 and the majority of 2008. It has however increased steadily from around June 2011 and ended the week 7.44% higher than this time last year. The M2/Base ratio also remains considerably lower than the historical average, but it has also increased steadily since June 2011 and is now 3.12% higher than the same time last year.