Monday, 10 March 2014

The Short Version of the "Austrian" True Money Supply (TMS), as of 24 February 2014

The short version of the Austrian True Money Supply (SVTMS) for the U.S. decreased by 0.47% (21.69% annualised) during the most recent week ending 24 February 2014 to reach US$ 9.9077 trillion calculated from the most recent monetary statistics published by the Federal Reserve. 

The 1-year growth rate in the money supply declined somewhat on the previous week, falling from 8.50% to 8.35%. This growth rate was 1.32 percentage point lower than it was a year ago and 32 basis points lower than 26 weeks ago.

The 5-year annualised growth rate continues to decline, falling to below 11% for the first time since 3 September 2012. The growth rate declined for the 13th consecutive week compared to one year ago. Ignoring the immediate run-up to the Lehman bust in September 2008, the last time such year on year declines in the growth rate took place was in Q3 and Q4 back in 2005.

Looking at all the various growth rates in the table and chart below, the overall trend in the growth rate of the money supply is still heading lower. Combined with many of the major U.S. stock market indices hitting fresh all-time highs last week, the declining money supply growth rate continues to be a clear warning sign to long term U.S. stock market investors that future returns are likely to be dismal at best. The Federal Reserve could find itself having to reverse its tapering policy sooner rather than later. 

Visit the "Austrian" True Money Supply archive here.