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Money Supply Growth

  1. M3 for the month of September just COLLAPSED!

    The monthly change from the previous month shows HUGE GROWTH from May to July of this year, with some continued growth in August, and then a total reversal in September.

    This bodes well for a CORRECTION in the Equity Markets!

    May: +92.6 billion
    June: +66.0 billion
    July: + 161.5 billion
    Aug: +23.4 billion

    Sept: -24.0 billion

    :eek:
     
  2. 'Tis but a flesh wound!
     
  3. can someone explain what M3 is composed of?
     
  4. I generally check the Fed's web site every couple of weeks to have a look at the money supply figures.

    I was wondering in recent weeks why the stockmarket remained so strong in the face of the decline in M2 and M3.

    Article from Mark Hulbert @ CBS MW

    http://cbs.marketwatch.com/news/story.asp?guid={DC538C00-FB42-4E2D-BB81-40BB99CD5282}&siteid=mktw

    Wondering if this is a one-month abberation or a change in printing press policy.

    Since it's taken the stockmarket over one month to react negatively (see data below), I'll take my cues from the stockmarket (waiting for a couple of months of declines) to tell me if debt deflation will be a problem.

    For the moment I'll assume that this a short-term thing.
     
  5. Some extracts from
    http://www.federalreserve.gov/releases/h6/Current/



    H.6
    Table 2
    MONEY STOCK MEASURES
    Percent change at seasonally adjusted annual rates

    M1 M2 M3
    ----------------------------------------------------------------------------------

    3 Months from June 2003 TO Sep. 2003 5.0 4.4 7.3

    6 Months from Mar. 2003 TO Sep. 2003
    8.3 7.6 7.9

    12 Months from Sep. 2002 TO Sep. 2003 8.1 7.2 7.2


    http://www.federalreserve.gov/releases/h6/hist/h6hist10.txt

    SEASONALLY ADJUSTED


    M2 M3

    Aug
    18 6176.4 8985.2

    25 6114.2 8926.7

    Sep. 1 6122.2 8921.5

    8 6119.3 8934.4

    15 6116.3 8953.0

    22 6107.0 8928.9

    29 6092.7 8921.9

    Oct. 6 6086.7 8882.9
     
  6. Yesterdays release of Money Stock measures shows a HUGE drop in Money Supply across the board M1 M2 M3.

    Since Mid August Money Supply has been SHRINKING, this does not bode well for the equity markets! Loss of liquidity means equity markets will have a much needed CORRECTION!

    Money Supply is the Life Blood of Equity Markets!

    Good Luck!
     
  7. ISI's Ed Hyman says that this is the largest drop by M3 in a DECADE!!!

    Wow.

    :)
     
  8. If M3 is the total national US money supply and it contracted, does this mean some of the money supply went out of the country in trade deficits and or foreigners cashing in and taking dollars out of the US or dollars flowing out of the US in some form or another? If so then there is less available to spend domestically.

    Or is it fair to say that in the past, the FED has inflated the money supply faster than it has disappeared from the US and this month, they just failed to inflate it faster than the outgo?

    Would appreciate an explanation from anyone.. Thanks
     
  9. Very interesting indeed, however, if you shorted Friday and held, based on this economic development.......i would have to say...you just got ur arse handed to you.

    The market has been reacting strange indeed for the last couple of days, however.....we just have not been able to sell hard, and stay down.

    not yet, at least.
     
  10. Here are projected M3 values by Market Vector.

    Wally
     
  11. Hi all

    I'm not too familiar with the US M3 (and other money supply) figures, but one graph I saw showed the drop in M3 growth (to below zero, thus a drop in the level too) to be a now-vs-3months ago figure. In that case, could it not be a base effect from the big rise in July?

    http://www.bullandbearwise.com/MoneySupplyChgChart.asp

    Even so, I agree that there is a big crunch, but beware of reading too much into money supply info... There are so many near term distortions that even the ECB have given up on M3H. But then I'm not at expert on Dollar M1/2/3 so I won't claim to know the answer to this one :D
     
  12. I will claim to have MUCH better teeth than that :D smiley

    Matt
     
  13. obviously occuring because people are taking their money out of large and small CD's, retail Money-Market Funds, and Savings Accounts and putting it into the U.S. STOCK MARKET!!!
     
  14. Heard that verbatim just a few minutes prior to your post on CNBC... And I do believe this is part of the answer.
     
  15. He likes the SUPPLY/DEMAND equation for the market and has now turned BULLISH for the first time in a long while, even though the Nasdaq is already +45%

    He says that there is a lack of new issues being offered in the upcoming calender, AND the recent spate of mergers and acquisitions is putting FRESH CASH into the pockets of portfolio managers.

    Look for any pullbacks to be brief and shallow.
    Too many fund managers are underperforming as it is.
    November is seasonally VERY STRONG for the equity markets!

    :)
     
  16. Doug Noland explains the M2 and M3 situation very well in this week's Credit Bubble Bulletin

    http://www.prudentbear.com/archive_...gory=Credit+Bubble+Bulletin&content_idx=28216

    One of the points he raises is the one from Waggie below.


     
  17. Very interesting article

    Matt
     
  18. Excellent article!!!

    A reclassification of liabilities from short-term to long-term ones is what is causing M3 to decline dramatically over the past 3 months.

    Very interesting!

    :)
     
  19. Anthony Sampson writes, in "The Changing Anatomy of Britain", Random House, New York, 1982,



    Eurodollar Empire

    "Today, together with allies on the island of Manhattan (Britain’s most important piece of real estate), the British Empire controls the entire $1.5 trillion Eurodollar financial market, another $300-$500 billion in the Cayman Islands, Bahamas, and $50-$100 billion in the Hong-Kong Singapore "Asia-dollar market". . . . Consider the $1.5 trillion Eurodollar market an "outlaw" market in the U.S. dollars over which this nation has no control. Here control and profits are overwhelmingly in the hands of London banks, who set the terms of lending and the interest rate on this mass of American dollars in relation to the London Interbank Borrowing

    182



    Rate (LIBOR) . . . U.S. banks like Citibank (New York City), on whose board of directors sits the powerful British financier, Lord Aldington, collaborate openly in this market. At the same time, British banks including the known central bank for the world’s drug trade, the Hongkong and Shanghai Bank, pour into America to devour U.S. banks. In 1978 the Hongshang (Ed.--Hongkong and Shanghai Bank) took over New York’s Marine Midland Bank, the state’s 11th largest commercial bank. . . The British also control the creation of American dollars. While Federal Reserve Board Chairman Paul Volcker tightens credit against the domestic economy, British-controlled banks in the Cayman Islands (such as the European American Bank--Ed.) a British possession 200 miles off Florida, and in the Bermudas and a dozen other "free banking" computer terminals create hundreds of billions of American dollars. How is this done? There are no reserve ratios or other restrictions on the creation of dollar-denominated credits in the Empire’s "free enterprise" banking. A $1 million bona fide credit coming from the United States can be turned into $20 to $100 million in dollar-denominated credits as it passes through the British system without reserve ratios."*
     
  20. Gold still plays a role in Currency

    http://www.apfn.org/apfn/reserve.htm

    Each day, representatives of four other London banking firms meet in the offices of N.M. Rothschild Company in London to fix the price of gold for that day. The other four bankers are from Samuel Montagu Company, which ranks Number 5 on the list of seventeen London merchant banking firms, Sharps Pixley, Johnson Matheson, and Mocatta and Goldsmid. Despite the huge tide of paper pyramided currency and notes which are now flooding the world, at some point, every credit extension must return to be based, in however minuscule a fashion, on some deposit of gold in some bank somewhere in the world. Because of this factor, the London merchant bankers, with their power to set the price of gold each day, become the final arbiters of the volume of money and the price of money in those countries which must bow to their power. Not the least of these is the United States. No official of the Federal Reserve Bank of New York, or of the Federal Reserve Board of Governors, can command the power over the money of the world which is held by these London merchant bankers. Great Britain, while waning in political and military power, today exercises the greatest financial power. It is for this reason that London is the present financial center of the world.
     
  21. Hmmmm