Friday, 23 January 2015

"Austrian" True Money Supply Weekly (12 Jan 2015)

The short version of the "Austrian" True Money Supply for the U.S., the measure of the money supply applied in this weekly report, decreased 0.24% on last week for the week ending 12 January 2015. At $10.6120 trillion, the money supply is now up $10.0 billion, or 0.09%, year to date.

The 1-year growth rate jumped to 7.39% for the week, the highest for 16 weeks (22 Sep 2014). Though it remains lower than both the long term- and 52 week averages, the growth rate was once again higher than the same week last year for the fifth consecutive week.

The 5-year annualised growth rate is still stuck in a downward trend as the growth rate declined for the 59th consecutive week compared to same week last year. The growth rate is however falling less than was the case especially during the nine week period covering 20 October to 15 December last year. It should be highlighted that the current growth rate of 10.26% is 213 basis points, or 17.19%, lower than the 12.39% peak from 21 October 2013.

In summary, the overall growth rate in the money supply is still slowing down, but some of the growth rates are now flattening or even increasing.


The growth rate in Federal Reserve assets plus the Austrian True Money supply, a measure of the overall monetary stimuli, remains in a downward slide. Since peaking at 15.09% on 27 November 2013, the growth rate has since dropped to the current 8.19%, the lowest reported since 26 December 2012.

The repercussions of this slide in the growth rate is yet to play out. It is blatantly obvious however that CPI inflation expectations have been falling sharply since August last year when the Fed was nearing the end of QE3.

For an economy run on inflationary policies instead of low government spending, low taxes and a high level of savings and investments, this drop in CPI expectations could very well be a harbinger of an economic correction. Many indicators are certainly pointing in that direction. To the extent that a steepening yield curve signals a strong economy, the current yield curve signals no such thing as it has flattened greatly during the last year.

Visit the "Austrian" True Money Supply Weekly archive here. 


Welcome to A Very Dislocated 2015