Friday, 13 December 2013

The Short Version of the "Austrian" True Money Supply (TMS), as of 2 December 2013

The short version of the Austrian True Money Supply (SVTMS) for the U.S. increased by 0.92% (60.64% annualised) during the most recent week ending 2 December to reach USD 9.8078 trillion calculated based on monetary statistics just released by FRED

Though the money supply expanded on last week, the 1-year growth rate fell from 8.05% last week to 7.82% this week, the lowest for three weeks and among the lowest it's been all year. As the chart below shows, the 1-year growth rate has been on a downward path for most of this year.

The shorter term growth rates have gathered a bit of pace in recent weeks: the 13 week annualised growth rate is up from 9.61% eight weeks ago to the current 12.43%. On the same basis, the 39 week growth rate is up from 5.36% to 7.83%. As I have previously pointed out in this report, this spur in the shorter term growth rates could very well be a short term effect of the budget ceiling debates (as government borrowing picked up again after the debt-ceiling agreement around mid October this year). However, as the table below demonstrates, the current shorter term growth rates are substantially lower than they were one year ago.

Overall, the indicators discussed in this report continue to show that money supply growth is slowing down. Combined with a highly valued U.S. stock market (here), this slowdown in the growth rate in the money supply is not a winning combination for continued upward movements in the U.S. stock market. Quite the contrary.