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I disagree, M3 offers a fuller view of the monetary picture, especially when we are experiencing deflation.Why not post this one Toro?
Because I'm not sure how relevant it is.
What that tells me is that intra-bank lending has fallen. Much of the M3 created during the 00s was merely financial paper that circulated amongst the banks, which had little if any real value. M3 includes repos and other intra-bank lending. A collapse in the credit markets would intuitively lead to declines in monetary aggregates, particularly those traded amongst the leveraged financial sector. Since much of the shadow banking system was funded in the intra-bank lending market, and since the shadow banking system has imploded, one would expect M3 to fall.
Here is M2, which includes currency, reserves, savings and checking deposits, and money market accounts, which probably is more relevant to the real economy.
The Fed has created $1.5 Trillions of new money , central banks around the world have offered unlimited cost free credit. Governments are spending like mad. So we should be feeling inflation, right? Except we aren't. M3 is contracting at the fastest rate since the 1930's (9.3% annualized). The stock market is lower than it was 10 years ago. PPI and CPI have a zero rate of change. People are struggling to get anyone to part with a dollar. They can't get loans, they can't sell their houses and they can't land a job.
Commercial real estate may be bottoming.
I disagree, M3 offers a fuller view of the monetary picture, especially when we are experiencing deflation.Because I'm not sure how relevant it is.
What that tells me is that intra-bank lending has fallen. Much of the M3 created during the 00s was merely financial paper that circulated amongst the banks, which had little if any real value. M3 includes repos and other intra-bank lending. A collapse in the credit markets would intuitively lead to declines in monetary aggregates, particularly those traded amongst the leveraged financial sector. Since much of the shadow banking system was funded in the intra-bank lending market, and since the shadow banking system has imploded, one would expect M3 to fall.
Here is M2, which includes currency, reserves, savings and checking deposits, and money market accounts, which probably is more relevant to the real economy.
The Fed has created $1.5 Trillions of new money , central banks around the world have offered unlimited cost free credit. Governments are spending like mad. So we should be feeling inflation, right? Except we aren't. M3 is contracting at the fastest rate since the 1930's (9.3% annualized). The stock market is lower than it was 10 years ago. PPI and CPI have a zero rate of change. People are struggling to get anyone to part with a dollar. They can't get loans, they can't sell their houses and they can't land a job.
i think too many implications are being read into this particular stat, zander. i think the M3 anomaly is a reflection of the deflation in real estate and consumer debt assets. they're not getting traded, dragging their value down. they're not collecting their credits, dragging their value down. assets are getting reassumed by banks from repos all the way up to TARP, dragging their value down.
deflation is entrenched - but mainly in these specific areas. no amount of quantitative easing will stop the cycle itself, although it can certainly keep it from dragging as heavily on the rest of the economy.
its like the alamo, but with an ammo shortage.deflation is entrenched - but mainly in these specific areas. no amount of quantitative easing will stop the cycle itself, although it can certainly keep it from dragging as heavily on the rest of the economy.
That is the theory, but more "monetization" is starting to become less and less likely as Fed governors are already felling uneasy about it. At some point they are going to say NO.
The deflation spiral is almost impossible to stop once it begins. Social mood has already turned negative, Obama is viewed as incompetent, the banks are a wreck, and the citizens of this country are not going to allow another bailout. I believe that the massive drop in M3 is a serious warning sign. If I am wrong, great. We'll experience a "Choppy" period. But if I am correct, we are looking at a severe double dip.
Trust me, it does not make me happy.....
Commercial real estate may be bottoming.
The only thing bottoming is the liberal news media for Obama.
Dude, the world looks clearer when you aren't viewing it through a political prism.
The only thing bottoming is the liberal news media for Obama.
Dude, the world looks clearer when you aren't viewing it through a political prism.
Good advice.
its like the alamo, but with an ammo shortage.deflation is entrenched - but mainly in these specific areas. no amount of quantitative easing will stop the cycle itself, although it can certainly keep it from dragging as heavily on the rest of the economy.
That is the theory, but more "monetization" is starting to become less and less likely as Fed governors are already felling uneasy about it. At some point they are going to say NO.
The deflation spiral is almost impossible to stop once it begins. Social mood has already turned negative, Obama is viewed as incompetent, the banks are a wreck, and the citizens of this country are not going to allow another bailout. I believe that the massive drop in M3 is a serious warning sign. If I am wrong, great. We'll experience a "Choppy" period. But if I am correct, we are looking at a severe double dip.
Trust me, it does not make me happy.....
stagflation from a credit crunch is possible. it is also possible that cash may circumvent that. we're seeing sectors of the economy which aren't getting dragged on so hard. can they carry the burden of the deflation at the other end of the performance spectrum?
Payroll employment data from the establishment survey show employment growth in the private sector of less than 100,000 per month this year, leading to the conclusion that the economy is growing too slowly to reduce unemployment. In contrast the data from the less publicized household survey show employment in the private sector growing this year at almost 300,000 per month. Last month it soared 891,000 thousand.
As noted before in [Employment is Rising Fast] around economic turning point the household data are more reliable and usually lead the establishment data. For example, in seven out of eight turning points associated with the last four recessions four downturns around the beginning of the recessions and four upturns around the ends of the recessions and the beginning of the recoveries the peaks and troughs of the household employment data preceded the corresponding peaks and troughs of the establishment employment data.
Still, to lend credence to the private sector employment data from the household survey and particularly the outstanding figure for August, it might be useful to look for other, indirectly supporting data. In very general terms such data are also supportive of the notion of improved employment gains in August. Thus, the Challenger job cuts figures show a significant drop in August to a new post- recession low. Similarly, according to the Conference Board, the number of new online help wanted ads, marked a new post- recession high in August. Some weekly data also point in the same direction, including the un-interrupted downtrend of initial unemployment claims, from its peak in mid-August to a low in mid September. All in all it appears that the data are what they are and not a fluke.
Payroll employment data from the establishment survey show employment growth in the private sector of less than 100,000 per month this year, leading to the conclusion that the economy is growing too slowly to reduce unemployment. In contrast the data from the less publicized household survey show employment in the private sector growing this year at almost 300,000 per month. Last month it soared 891,000 thousand.
Payroll employment data from the establishment survey show employment growth in the private sector of less than 100,000 per month this year, leading to the conclusion that the economy is growing too slowly to reduce unemployment. In contrast the data from the less publicized household survey show employment in the private sector growing this year at almost 300,000 per month. Last month it soared 891,000 thousand.
Here is the data Employment Situation Summary Table A. Household data, seasonally adjusted
Where does it say that employment soared by 891K?
Oh yeah, data verification is a pain in the butt. My guess would be that the number is some sort of gross hires numbers rather than net hires. A guy who lasts a week at his new job would be counted in gross hires but not net hires.FWIW the BLS data also in no way supports the claim that the household survey indicates a 300K/month employment increase in the Civilian noninstitutional population.
I was saying he was taking data from some irrelevant column that had nothing to do with the question at hand which irrelevant column doesn't matter to me. Whether it is the household survey which undercounts unemployment or the birth/death survey which overcounts job creation as far as I'm concerned the L in BLS is superfluous.here is the data from the household survey:
Employment Situation Summary Table A. Household data, seasonally adjusted
and from the monthly report of the BLS
Employment Situation Summary
If you can find data to support either of these claims please do.
