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View Full Version : Interesting idea: M1 dropping as a function of economic slowdown?



c1ue
07-11-07, 12:26 PM
http://globalresearch.ca/index.php?context=va&aid=6239&ref=patrick.net


The question is not when will the system start to come down, because this has already begun. It’s shown most clearly by the fact that according to Federal Reserve data, M1, the part of the money supply most readily available for consumer purchases, is not only lagging behind inflation but has actually decreased in eleven of the last twelve months. This means that the producing economy is already in a recession.

Looking at the data from http://www.federalreserve.gov/releases/h6/hist/h6hist1.txt

This statement is surprisingly true:

Month M1 Seasonally Adj. M1 Not Seasonally Adj. (All numbers are that month minus M1 amount from 12 months previous)
Jun-06____-4.2________________-5.2
Jul-06_____4.2_________________3.8
Aug-06____-5.6________________-5.8
Sep-06____-14.8______________-15.4
Oct-06____-5.2________________-4.4
Nov-06____-4.7________________-4.6
Dec-06____-6.7________________-8.2
Jan-07____-6.5________________-5.4
Feb-07____-14.2______________-13.8
Mar-07____-14.3______________-14.9
Apr-07_____-2.1_______________-1.4
May-07____-10.5_______________-9.5

Looking at the data going back to 1970 - 3 times has this type of situation lasted more than 1 or 2 months:

Oct 2000 - January 2001
June 1995 - January 1997
June 1989 - September 1989

The magnitudes for these periods?

Month M1 Seasonally Adj. M1 Not Seasonally Adj. (All numbers are that month minus M1 amount from 12 months previous)
Jun-89____-4.9_________________-5.7
Jul-89_____-3.6_________________-4.8
Aug-89____-3.9_________________-4.5
Sep-89____-2.7_________________-2

Jul-95_____-1__________________-0.8
Aug-95____-5.1________________-5.2
Sep-95____-5.3________________-4.8
Oct-95____-10.1________________-8
Nov-95____-12.9________________-15
Dec-95____-16.9_______________-17.6
Jan-96____-23.3________________-21.8
Feb-96____-27.8_______________-29.3
Mar-96____-28.9_______________-29.5
Apr-96____-24.3________________-21.3
May-96____-24.3_______________-28.5
Jun-96____-28.8________________-28
Jul-96____-29.1_________________-26
Aug-96____-32.9________________-35
Sep-96____-43.9________________-41.6
Oct-96____-45.8________________-46.7
Nov-96____-51.4________________-54.5
Dec-96____-50.8________________-51.2
Jan-97____-46__________________-46.9
Feb-97____-42.2________________-42.3
Mar-97____-39.6________________-39
Apr-97____-50.2________________-48.8
May-97____-61.1_______________-57.3
Jun-97____-52.7________________-51.2
Jul-97____-49.4_________________-50.2
Aug-97____-46.6________________-44.9
Sep-97____-27_________________-28.6
Oct-97____-28.7________________-32.2
Nov-97____-20.1________________-20.8
Dec-97____-13.4________________-13.3
Jan-98____-8.6__________________-8.3
Feb-98____-7.2__________________-7.7
Mar-98____-0.8__________________-0.6

Oct-00____-3.9__________________-3
Nov-00____-19.1_________________-21
Dec-00____-35.3_________________-36.6
Jan-01____-24.7_________________-26.5
Feb-01____-8____________________-7.6

Not sure what to conclude from this, but it is interesting.

Tet
07-11-07, 12:59 PM
Not sure what to conclude from this, but it is interesting.

M1 is at the same level as Dec 2004, no real change in 2 and a half years. Now how much of M1 is actually in circulation and how much is now in sock drawers for one reason or the other is the real question. All the d0llar coins minted lately immediately turn into collectibles, the mint conviently forgets to stamp In God We Trust on the side of the coin. People believe penny's are still copper and have decided to collect rather than spend. Other coins minted lately have all been collectibles, new nickel, state quarters, all put M1 in the sock drawer not the cash register. Credit cards are rounding up you purchases giving you a better deal than cash. All this tells me money is being created through the Fed and borrowing and almost nothing is being created through the Treasury. We have an economy hungry for real cash, real money and we don't obviously have enough of it. The herd is being forced to borrow, at some point the Fed will make what's in the sock drawer worth spending, not saving. At any time the Fed can decide that a penny is really a nickel, this comment has already been made by the Fed. What will be the event to stimulate the circulation and creation of M1?