Friday, 6 September 2013

The Short Version of the "Austrian" True Money Supply (TMS), as of 26 August 2013

The short version of the Austrian True Money Supply for the U.S. fell compared to previous week for the third week in a row according to monetary statistics just released by FRED. As a result, the money supply has now dropped 9.72% on an annualised basis during the last three weeks.

Compared to the same period last year, the money supply as of 26 August expanded by 8.84%, the lowest year on year increase since 15 December 2008. This is still however higher than the 8.31% average since 1980.

All the shorter term growth rates, except for the 13 week period, are now lower than the longer term growth rates (1 year and longer). Also, the 6 week growth rate of 0.76% is now 8.08 percentage points lower than the 1 year growth rate of 8.84%.

As pointed out earlier in the week (here), the plummeting of bank credit growth is driving the growth rates for most money supply measures, including the one in this report, downwards.

This could be bad news for the U.S. (and other) stock markets to the extent that money supply growth drives stock prices (see here for some links on that subject).