M2 Climbs Again: 20 Out Of 22 Consecutive Increases In Broad Money

In the week ended December 6, M2 rose again, this time by $1 billion W/W, hitting a fresh all time high of $8,813 billion. This is increase 20 of 22 consecutive weeks. Perhaps just as importantly, the non-seasonally adjusted number soared by $43.7 billion, also hitting an all time high of $8,823.6 billion. Yet despite this ongoing surge in broad market money, a rather odd thing happened last week: currency in circulation: a component of the M1 and thus M2, actually declined for the first time in 22 weeks, on both a seasonally adjusted basis ($0.1 billion) and on a Non-seasonally adjusted one ($0.7 billion). Combing through the components of M2, the only actual increase in the broader monetary aggregate was in savings deposits at commercial banks which increased by $42 billion, offsetting drops in every single other category, all of which were negative W/W. The bottom line is that the Fed at least wants those who care and follow this data series, to know that the penetration broad money is spreading. Whether or not this is enough to offset ongoing consumer deleveraging is a different story.

Comments

[luigi]

This is indeed most interesting: isn't it a sign of the fact that banks are inflated like water bombs with liquidity to dilute the toxic assets while the "real world" lacks money?