Sharp money supply contraction points to Wall Street crunch ahead

[Sapiens]

http://www.telegraph.co.uk/money/mai...nusecon119.xml

Data compiled by Lombard Street Research shows that the M3 ''broad money" aggregates fell by almost $50bn (£26.8bn) in July, the biggest one-month fall since modern records began in 1959.

Good article, worth a look see.

[metalman]

Re: Sharp money supply contraction points to Wall Street crunch ahead

http://www.telegraph.co.uk/money/mai...nusecon119.xml



Good article, worth a look see.

hey, finster. where's your m3?

[phirang]

Re: Sharp money supply contraction points to Wall Street crunch ahead

check eurodollar and repos...

[Guest]

Re: Sharp money supply contraction points to Wall Street crunch ahead

GB set for harder fall than US. Great time to chuck the GBP and throw their lot in with the Euro crowd, but the Brits have a way of hugging their misfortunes to themselves as closely as they do their good fortunes. Insular lot.

[metalman]

Re: Sharp money supply contraction points to Wall Street crunch ahead

GB set for harder fall than US. Great time to chuck the GBP and throw their lot in with the Euro crowd, but the Brits have a way of hugging their misfortunes to themselves as closely as they do their good fortunes. Insular lot.

maybe the imf bail 'em out again. oh, i forgot. the imf is broke.

[nathanhulick]

Re: Sharp money supply contraction points to Wall Street crunch ahead

Seems like they are equating 2.1% growth to mean that M3 is shrinking. Must be that new math...

[Rajiv]

Re: Sharp money supply contraction points to Wall Street crunch ahead

I think you are misinterpreting what the article said

Data compiled by Lombard Street Research shows that the M3 ''broad money" aggregates fell by almost $50bn (£26.8bn) in July, the biggest one-month fall since modern records began in 1959.
.
.
.
On a three-month basis, the M3 growth rate has fallen from almost 19pc earlier this year to just 2.1pc (annualised) for the period from May to July. This is below the rate of inflation, implying a shrinkage in real terms.

[metalman]

Re: Sharp money supply contraction points to Wall Street crunch ahead

I think you are misinterpreting what the article said

well. we can always print some more money to pay these guys, thus expand the bonar supply...

Top 200 Federal Contractors : Total Purchases: $436,362,904,789

[Roughneck]

Inflation or not

With all the talk of inflation I found this interesting

http://marketoracle.net/Article5939.html

What say you???

[GRG55]

Re: Inflation or not

With all the talk of inflation I found this interesting

http://marketoracle.net/Article5939.html

What say you???

I'll take iTulip and shadowstats over Lombard any day. 'Nuff said...

[makkie]

Re: Inflation or not

Please correct me, but ...

2% growth is still growth !

The growth plunged from very heavy to just a little less heavy.
It is still growth !

[makkie]

Re: Sharp money supply contraction points to Wall Street crunch ahead

I think you are misinterpreting what the article said

Which inflation number do we apply here ? Any economists out there ?
Deflator ?

How can we apply one inflation number on an other - in this case M3 ?

[makkie]

Re: Inflation or not

double topic:
http://www.itulip.com/forums/showthread.php?t=4841

[FRED]

Re: Sharp money supply contraction points to Wall Street crunch ahead

There is an Internet-wide conspiracy to drive the iTulip crew insane with these constant calls for falling or rising inflation due to falling or rising money aggregates. Okay, maybe not a conspiracy but it drives us nuts!

Looking at M3 or any other money aggregate in the absence of economic output data, such as GDP, is like looking at your air speed in flight and trying to determine how long it's going to take to get to your destination. You have to consider headwind or tailwind to determine ground speed to figure out when you are going to arrive.

There is no long term correlation between M3 and inflation on it's own. None. There is correlation between the velocity of money and inflation, and M3 is the denominator in the velocity of money equation:

V =PQ/M

Where V is the velocity for transactions counting towards gross domestic product, PQ is domestic product (each transaction is made up of a price part times a quantity purchased part), and M is the money supply.

Going back to our analogy, output is your headwind that allows you to calculate your ground speed V given your air speed M.

To wet your appetite, two charts below a piece we're working on now to settle the question once and for all for anyone who is interested in the actual facts instead of getting caught up in an economics psychodrama starring money aggregates.

Since 1959, periods of high correlation between the velocity of money and inflation correspond to big macro events: before the end of the gold standard, after the Volcker inflation smack down, and during the post tech bubble recession. Else, low correlation for various reasons.

We are in a period of inverse correlation between velocity and inflation. Why? Because the US is in an inflation trap. That also explains why gold prices are rising as we enter a period of declining output, aka recession. More later.

[makkie]

Re: Sharp money supply contraction points to Wall Street crunch ahead

Thank you FRED for your elaboration.

regards makkie