Economic Charts

All economic charts are at the bottom of the page.

Sunday, November 14, 2010

Weekly M1 and M2 Money Supply

Last weeks Money supply showed a 0.44% increase in M1 (month-to-month) and a 0.26% increase in M2. For monthly M3 please refer to the bottom of the pages link to the graph showing M3.  Figure 1 shows the change in M1 and M2 week to week, as you can see it is on a steady rise in dollars.
Figure 1

Figure 2 shows the percent change in M1 and M2 from the previous year and shows M1 rising (short term) moving sideways from a longer term view.   You can see that in the latter half of 2009 we had a decline in money supply, as our money supply is debt backed.  As debt dried up due to defaults, write-downs, loan modifications and consumers paid down debt (plus many other reasons) the money supply contracted.  The FED has increased money printing in 2010, which is helping offset the decreases in debt (due to the reasons stated prior) making it appear to move sideways year-over-year.  

Figure 2

Taking a look at M3 for the year in figure 3, we can see that M3 started expanding approximately Mid 2010 and has really ramped up (coinciding with money printing activities such as POMO).

Figure 3

The following are the breakdowns of the different Money supply categories according to Wikipedia
  • M1: Bank reserves are not included in M1.
  • M2: represents money and "close substitutes" for money.[13] M2 is a broader classification of money than M1. Economists use M2 when looking to quantify the amount of money in circulation and trying to explain different economic monetary conditions. M2 is a key economic indicator used to forecast inflation.[14]
  • M3: Since 2006, M3 is no longer published or revealed to the public by the US central bank.[15] However, there are still estimates produced by various private institutions. (M2 +large deposits and other large, long-term deposits)

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