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M2 Surges By $30 Billion In Past Week To Highest Ever, Even As Monetary Base Declines
Another week in which the M2 jumped to a fresh all time high, increasing by $30 billion W/W to just under $8.7 trillion. This was only the fourth largest weekly jump in this broad money aggregate in 2010, with the prior biggest ones clustered just around the time of the Greek "out of court" reorganization and the flash crash in May. This was also the 8th sequential increase in the M2 in a row.
Oddly enough this occurred even as the Monetary Base (NSA) declined by $11 billion to $1.983 trillion. Currently, the M2-MB ratio stands at 4.4x, close to its all time lows, with the recent decline purely a function of the modest contraction in the Fed's balance sheet as MBS had been rolling off for the past 4 months. With QE Lite in play, expect the Fed's Balance sheet to remain flat, which will likely mean that the ratio of the Fed's asset to the Monetary Base will remain more or less unchanged at its elevated ratio of 1.15x (with a tendency toward declining), compared to the historical average of around 1.00. Note the (as expected) inverse relationship between the M2-MB ratio and the total size of the Fed balance sheet, as the monetary base has exploded courtesy of excess reserves, without this number actually hitting M2. Is the recent leakage in M2 higher, coupled with a contraction in MB the critical step that all the inflationists have been dreading (yet at the same time expecting)?
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Futures going into orbit right now. Why even think about fighting this shit?
OMG hey it's fucking nighttime so of course the futures are up.
Actually, they at least used to have the common deceny to perpetuate the massive unprecedented fraud pump during the wee hours. Why wait...I suppose. Let's get the party started early.
yep.. once again, while we slumber while they push this market further to the sky..
then, miraculously hold it there all day long!.. disgusting!
Assuming this surge holds into the morning, the financial media will undoubtedly be selling the line that these new global bank regulations are good for the markets. The Harrisburg, PA bailout will be relegated to a footnote at the end of the financial news rundown.
The Harrisburg situation is a message that party times will continue for anyone with influence for as long as possible(unions, pension plans, muni brokers, muni holders, politicians who get to act like heroes), and muni debt problems will be solved with fed bailouts laundered through the states.
It'll hold and 'improve' with some sleepy time pixie dust. I look for +125 to +150 on the DOW by the time I take my morning dump.
But don't call it a bailout. Lol.
So the pump monkeys are pushing for a 8 outta 9 day run up? In September?
Phuck me running.
Wow, I live in Pa, we are much "better than expected" compaired to Californifacation right ???
Wait.
H'burg got bailed out? omg....
Yeah, you can bet that Gubnor got a little call on Sunday from DC. And how about this little gem?
"The state will also give Harrisburg $350,000 in grants and a $500,000 loan to hire Chicago-based financial consultant Scott Balice Strategies LLC to develop options for financial recovery, potentially including the sale and lease of assets such as parking garages and meters."
Obongo's pals? Why don't they pay me 3/4 of a million bucks saving 100k, I could do it. Everyone's pay? Cut in half. Didn't fix it? Cut in half again.
We are doomed
FYI:
Linda D. Thompson is the current mayor of Harrisburg, Pennsylvania. She assumed office on January 4, 2010. Thompson is Harrisburg's first female and first black mayor.[1]
Born and raised in Harrisburg, Thompson graduated from Harrisburg High School in 1979.[2] She went on to attend Howard University in Washington, DC where she received a B.S. in Communications. While in Washington, Thompson interned at the United States Department of Justice.
And no economic news on Monday to (temporarily) rein in the market. Can't fight it but I'm damned if I'll jump in tomorrow morning without a pullback. Check out the op ex levels - we are overbought.
So. Broke ass FDIC is just handing out cash to banks who are INSOLVENT. Think this is going to cause inflation. Could be wrong but I doubt it.
Irrelevant.
Fed up to now believes in its prescience and ability to marshall prices under any circumstances. But there are black swans in the waters. They can't control the global, dollar-denominated money supply. Fragile situation.
Me too.
Yup. More stupid Fed trix. One day the rabbit won't be in the hat.
Who says it doesn't rain money? It's nothing more than bits and bytes in a Second Life fantasy world.
Does anything make the market go down anymore?
Yes, GS and MS going short just prior to the plunge.
Bingo.
Today.
Now...
Cnbs will be claiming summer vacations on the lack of volume again I'm sure.
How can you say "the Fed is done with QE"? Limiting QE to merely the debt markets is profoundly limited--as if you are saying "the only thing in the interest of finance is government." Doesn't that say it all? The LAST thing that finance is interested in is government! Indeed, "piss off the bankers long enough and they may blow up your government" sounds a lot closer to the truth to me. Indeed imagine living for moment living in the 70's when the Fed actually had margin requirements! So therefore it goes without saying there's never been a lack of arrogance or hubris from the "government set." So perhaps all we're heading towards is the financial equivalent of Clint Eastwood saying "I know what you're thinking, punk. Did he fire 5 shots or 6? Well in all the commotion to be honest I don't remember myself. So therefore all you have to ask is...."
all your M2 are belong to us, make your time bitchez
heh
I've got my popcorn ready. Should be a good show.
Blast finance over a half hour after opening...
disgusting
If they can pukl this shit off with Vix selll signals, hindenbergs, HS then what hope of even a semblance of a free market have we got
Looks like prechter and Machugh will have to accept defeat on this one
The FEd really are unbeatable it seems
Ain't over til the fat lady sings.
She may be warming up behind the panorama right now...
Wow, Futes up 80. Looks like fed is pumping again. Might as well get used to it. Looks like the M2 issue is already built into the Machines software. Next issue...
Looks like M2 might be the answer to the past 18 weeks of outflows....
Multiplier and velocity still contracting...
Wow, just imagine if they put that into the market, tha'd be awesome. What was that you said? They did? Oh...
eurpean shares not far off the all time highs since the crash less than 5 percent off
Its all over for the bears now
Prechter and Machugh, Mish need new jobs
Time will always tell...
pump and dump...it is options exp week
Bingo
Short term dynamics don't favour the bears, not in option expiry week. The driver is also China and India again, not just lax Basel III rules. There will be a better time in the next couple of weeks to short. In the meantime, why give your money to the market ?
Copper is showing the coming inflation. This will not end on a happy note.
Dismal
I don't think so
Its all over bar the shouting now
its inflation to the moon
we all know what should happen buts its time to accept defeat when you are up against tyhe FED and its computers and fraudulent accounting.
If it was going to roll over then this week would have been it. The wave count is utterly screwed now unless we decline straight away.
Where else would you have your money?
cash with 1 percent interest?I think a good compnay paying good dividends thats cash rich is a abtter bet
than anything else apart from Gold
Agree. Am long commodity equities, PMs, and cash. No bonds. When this move blows itself out, I might buy some volatility. Or I might not. But thats the fun of it, Mr. Market invites you to play every day...
Have the bulls plunged?
Why do people even look at M2 when most of the money is credit money ($52 trillion vs. $8.7 trillion).
Look at a graph of credit from the Z1 flow of funds and you'll see that, despite the Fed's 2 trillion money printing out of thin air and the government increasing its debt like a drunken sailor, overall credit has been decreasing for the last 5 consecutive quarters.
As long as people keep looking at fiat money supply and keep ignoring credit money supply they are going to be looking at the one oak tree that hides a pine forest.
When will people finally understand that we don't live in a world of fractional reserve banking where banks multiply reserves to supply credit and money (with fiat money > credit) but in a pure credit banking system where banks supply credit, adjust monetary deposits and look for reserves later (with credit >> fiat money).
Here's a question for all the fans of the money multiplier model of fractional reserve banking : how is it possible that credit is 6 times larger than the broad fiat money supply (M2) ?
Here's an example of fractional banking explained:
http://en.wikipedia.org/wiki/Fractional-reserve_banking#Example_of_deposit_multiplication
Now look at that table and tell me what you see?
Total Amount of Deposits: $457.05
Total Amount Lent Out: $357.05
Total Reserves + Last Amount Deposited: $100
Now, which one is larger?
Total amounts of deposits (fiat money supply)?
or Total amount lent out (credit) ?
Which one is larger in reality ?
Total amounts of deposits (M2 = $8.7 trillion)?
or Total amount lent out (credit = $52 trillion)?
chrisina
All agreed what we are refering to is though is this ability of funny money to keep stock prices/asset prices up indefinately and thus create inflation via higher costs. If assets go up I do not care if its because the overall money supply has increased or not
all I care about is the price which is what Mish ect seem to forget. As for prechter saying the Fed cannpt influence stocks that is utter bollocks
they have been doing EXACTLY that every Monday cfor the last 18 months
Stock prices are up for the last 18 months but how are they compared with the peak?
What about house prices?
You want to look at a graph of M2 vs stock prices, house prices, commodities prices, CPI, etc...? If you can find some correlations, some causal relations, be my guest. But the simple truth is that there's none. Because M2 is a tiny part of money.
If you want to look at the long term trend of where they are heading for, you need to look at the long term trend of credit supply. And that is DOWN. When you have overall credit that is at 370% of GDP and shows signs of contraction because banks can't stuff more loans to already overlevered American households and overlevered businesses, then you know that we have entered a massive unwinding of the credit buuble and that is credit deflation.
Now nobody in their right mind has ever said that short term evolution of asset prices is a consequence of short term credit evolution. Short term asset prices react to hundreds of other factors.
Also, I completely agree with Gonzalo Lira that this massive credit deflation increases the risk of a run on treasuries, the dollar, and a hyperinflationary collapse. But that is a completely different matter alltogether. Whether this protracted credit deflation ends with a bang or a whimper is still very difficult to predict... For that one would need to know, what is the next congress gong to do, what are the Chinese going to do, what are Israel and Iran going to do, etc... There are so many hundreds of different scenarios that trying to predict what will be and when will strike the next black swan is an impossible task.
All I know for sure is that credit is going to contract, from $52 trillion down to maybe $25 trillion in the US (and same thing in Europe, Japan, Australia, Canada). So that's a different environment from anything we have lived so far since the end of WWII. A very different and PAINFUL process. In that environment, the only asset I believe can only go up in price, is Gold, because it is the only one that doesn't have liabiilies attached to it from this contracting credit system. All the other ones, whether stocks, houses, bonds, industrial commodities over the long term are going down, which doesn't mean we won't see incredible and crazy rallies for long periods of time for some of these asset classes in markets that are completely rigged by worldwide government interventions and huge mood swings from successive itterations of contradictory worldwide government policy changes. But unless you can know what's in the combined sociopathic heads of the power hungry elites of the world, it's perfectly impossible to predict which scenario of the hundreds of possible ones will actually happen. All I know is that whichever scenario ends up becoming history will be a very painful one for most. How long will that pain last? No idea, 10 years, 20 ? Maybe 50?
The last time we had such a credit contraction, the pain lasted for roughly 20 years. My guess is this time will be much longer.
http://www.federalreserve.gov/releases/z1/current/z1r-4.pdf
You aren't alive anywhere like you're alive at fight club.... Fight club isn't about winning or losing fights. Fight club isn't about words. You see a guy come to fight club for the first time, and his ass is a loaf of white bread. You see this same guy here six months later, and he looks carved out of wood. This guy trusts himself to handle anything. There's grunting and noise at fight club like at the gym, but fight club isn't about looking good. There's hysterical shouting in tongues like at church, and when you wake up Sunday afternoon you feel saved. ~Chuck Palahniuk, Fight Club, Chapter 6
Chrisiana
we have heard this argumnet for how long now?
18 months? Actually in the UK house prices went back up
with the low interest rates etc and peak tpo trough are less than 10 percent down. Its crazy with the size of the bubble but thats how it is.
Everyone with any sense has said that stocks will go down but the rally has lasted a year and a half and shows no sign of being allowed to go down
I do not see this ever ending as with the touch of a key pad they can have more money to throw at it.
Applying what happened in 1930 may prove to be worng
back then they couldn't credit banks all around the world a the touch of the keyboard to get stocks pumped up.
Prechter says the FED cannot control anything
I say bullshit they have for the last 18 months and that is not short term
"Actually in the UK house prices went back up"
And now they are back down. How are they compared with the peak ?
You want to bet on which long term direction they are heading for?
Same thing with stocks. Since the peak they've gone down, up, down, up, down,... but overall, they're still down as far as I know. You want to bet which long term direction they are heading for? I have not the vaguest idea where they'll be a the end of the year, maybe Bernanke will do another dose of QE? Maybe not? What will the algos do? Will Israel attack Iran? Nobody (well at least nobody amongst us small investors with no connections with the sociopathic power hungry elites) can predict the short to medium term girations of completely rigged markets. All I can tell you is that the long term is DOWN.
Ya just can't make this stuff up:
http://www.idvl.org/harrisburglivinglegacy/Bio137.html
"Is the recent leakage in M2 higher, coupled with a contraction in MB the critical step that all the inflationists have been dreading (yet at the same time expecting)?"
No, not yet. It wasn't even a real surge in M2, it was mostly seasonal adjustment. Unadjusted M2 gained only $6 billion. Besides, week-to-week changes in M2 are very sloppy.
Where you really need to be looking are the asset and cash lines in the Fed's commercial bank credit reports, and the currency in circulation line in the weekly Fed balance sheet numbers. Any overall credit expansion will be clearly visible in at least one of those places before you'll see anything certain in M2.
http://keynesianfailure.wordpress.com/2010/09/10/delayed-deleveraging-meets-the-keynesian-endpoint/
Spinone,
Thanks for the remind. I sometimes lost in the mountainous proverbial and forget what ZH is. +1.
I agree with yabs's comment above.
What worries me is that the Fed will continue with its reckless actions by doing things such as 1) printing ever more money, 2) making rates at the Fed negative to try to get banks to lend out money rather than parking it at the Fed, 3) start buying stocks (if it's not already) and more, different assets and 4) intervene directly in the forex markets to force the dollar down, increasing inflation.
And all this, without any thought to the fact that it's pushing on a string. This is not a normal recession and the Fed seems determined, by any and all means available, to proceed as if it is.
As I say, it worries me.
DavidC
chrisina
I ma referring to the direction since march 2009
that dcirection has been up and away for both stocks and UK house prices
yes they are still down from the peak which is what you would expect after a crash but since last march we have seen RISING prices and inflation.
I have already made a bet that they will go down and lost badly
I really do think people are understimating what lenghts TPTB will go to
to keep the illusion of recovery up with stocks prices
Look at all ythe tech indicators and tell me how they keep the baby afloat.
The market seems to be like Michael Myers and refuses to die
"that dcirection has been up and away for both stocks and UK house prices"
that direction has been up and away for stocks until April. This was a 13 months bear market rally engineered by TPTB to give an illusion of recovery via $2 trillion money printing by the Fed and similar deficit by Govt.
Similar with UK house prices that have now (see August data) resumed their downward trend. You'll see that the downward trend will continue.
"I really do think people are understimating what lenghts TPTB will go to to keep the illusion of recovery up with stocks prices"
Correction : TPTB want you to believe that they will go to incredible lenghts to reflate assets and keep the illusion of recovery. The name of the game for TPTB is to try to create inflation expectations on the part of investors.
But TPTB would need to accelerate the money printing and the deficits in order to counter private deleveraging if they wanted to maintain the illusion of recovery. You' can bet that instead of accelerating, they are going to decelerate. Instead of $2 trillion per year, they are going to be forced to go to half or even a third of that, which means it'll work even less.
TPTB would have to show their willingness to increase Govt debt by $25 trillion, or 200% of GDP (paid for by freshly printed dollars created out of thin air) to counter the deflationary forces from a rapidly deleveraging private sector. Obviously, if they did signal this, it would mean an immediate run on treasuries, the dollar, and an hyperinflationary collapse. That means a reset of the system : debtors win all, creditors loose all, and tyranny.
Lets look at what the experts say though as well
I think faber has been the most accurate and whilst he says we are all doomed
he still thinks stocks are a better place to be than cash
If you want to bet gainst him then go ahead
I thought Machugh and prechter would be proved correct but they are obviusly wrong
Machugh has been harping on about catestrophic wave C for over a year but still stocks go up
"I think faber has been the most accurate and whilst he says we are all doomed he still thinks stocks are a better place to be than cash"
Nope, Faber has been saying that for the coming year TPTB can put a floor to how low stocks can fall. He maybe right, but it won't hold for long. TPTB are building dikes of sandbags ($50 billion here and there) to counter a private debt tsunami of $25 trillion.
Faber also says buy arable land and put barbed electrically-charged wire around it.
If it's that bad, how the hell do I get my broker on the phone to send me my monthly statement by Pony Express?
Equities are a rigged casino game right now.
The deflationists have been "wrong" to this point simply because of timing. Every time the economy comes under pressure the government/Fed steps in to extend and pretend. When the money starts to wear off, we see renewed pressure immediately and the government attempts to step in again. The one phrase people should memorize here is "diminishing marginal returns".
There are limits in this world, and right now it's the end of credit, and most likely not the end of the dollar. NOT YET. That limit is father down the line. Of course no one can predict exactly how the collapse dynamic will play out because there are too many interacting variables. You can throw a ball up in the air and know it will come back down, but it would be very difficult to predict exactly the trajectory it will take and what location it will end up.
http://peakcomplexity.blogspot.com/2010/09/limits-to-complexity.html
I'm not sure about that this latest ramp up from 1040 has gone ballistic in a shorter time frame than last. We are getting higher highs and higher lows
The only chart that matters: S&P500 priced in ounces of Gold
http://stockcharts.com/h-sc/ui?s=$SPX:$GOLD&p=D&yr=3&mn=0&dy=0&id=p98695644552
Does that look to you as if we are "getting higher highs" ?
Updated DOW weekly chart:
http://stockmarket618.wordpress.com
Likely up days the next few weeks:
http://www.newyorkfed.org/markets/tot_operation_schedule.html
chrisina
How do you know that a reset of the system with hyperinflation is not the desire of TPTB?
Think one world currency and government
Thank u, i found this for a long time.
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