$10 Trillion M2 Is Now In The Rearview Mirror

Tyler Durden's picture

Two weeks ago we observed that the broadest money aggregate tracked by the Fed, M2, was less than $10 billion away from crossing the historic $10 trillion mark. As of this week, this number now officially has 14 digits for the first time ever, or $10,035,100,000,000 to be precise (technically the non-seasonally adjusted number crossed $10T last week, but for some reason bank deposits need to be seasonally adjusted, so waiting for the traditionally fudged data seemed appropriate). And we have a $50 billion increase in savings deposits, aka deferred buying power to those who still have the capacity to save, in one week to thank for putting $10 trillion in the rearview mirror.

Which actually brings us back to a point we have discussed previously, namely that even though M1 may be flattish and declining in direct proportion with the amount of excess reserves held by banks, and currency in circulation is rising at a glacial pace of about $1 billion each week - a key reason why the inflationary animal spirits have not bee unleashed yet, it is M2, i.e., total deposits, where the bulk of electronic money is contained, and which is rising at a soaring pace as seen on the chart below. And this is happening even despite ZIRP and soon - NIRP. Because this is real, well technically electronic, money that is just waiting for the signal to be withdrawn and spent on other things. Like bread. And wheelbarrows.

Now as the chart below shows, while the ratio of total deposits (checking, savings, small-denomination time deposits, and other) to currency has declined from a peak of 13.0x in 1987 to just over 6.0x in 2000, this ratio has been increasing since 2000 and is now back to 8.0x.

Which then begs the question: if and when the US currency in circulation starts picking up, due to conversion of reserves into dollar bills, and if the current ratio of reserves to currency persists, then the conversion of another $1.6 trillion in reserves into currency (since the Fed will be absolutely unable to withhold the reserve avalanche from converting into real circulating money without raising the IOER to a level which would crush the stock market, directly in opposition of what the Fed's prime and only directive is) would mean, all else equal, total bank deposits would rise from the current $8.4 trillion to $21 trillion.

What the price of a loaf of bread, or a bar of silver, will be at that point, is anyone's guess. Or a wheelbarrow for that matter.

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bob_dabolina's picture

If I am elected for a second term I promise to double that.


UP Forester's picture

If I am elected I'll triple it, give it to the banks, and off-shore the rest of the jobs.


nmewn's picture

ROTFL!!!...debt doesn't matter, elect me and everyone can just CHARGE IT!!!...don't need no stinkin jobs anymore!!!

flacon's picture

"You didn't print that!"

The Monkey's picture

Now if V2 would move, we would have the start of a real recovery. Instead, we have burgeoning seculation abetted by excessive money supply.

That leaves us specilators wondering how much more rope will the central banks dole out to hang themselves with? Until then, trade the bubble blowers!

engineertheeconomy's picture

Vote for me, I will put a printing press in every garage and we can all retire today with benefits

francis_sawyer's picture

Flacon is on the right track ...

~ "I didn't charge that"...

TheSilverJournal's picture

In under one year this thing will be crossing $20T.

francis_sawyer's picture

 "Because this is real, well technically electronic, money that is just waiting for the signal to be withdrawn and spent on other things. Like bread. And wheelbarrows."


aka ~ Last one out is a rotten egg...

The Monkey's picture

What's with the downvotes? Check it out:

With an inflation target set at 2%, Bernanke can go to town. And we know he will.

The best thing that could happen to all of us is that the inflation genie gets out of the bag in a big way soon. Otherwise this nonsense will continue indefinitely.

surf0766's picture

The problem is the under-reporting of inflation.  At 2%, most people are seeing much higher levels. 

fourchan's picture

what does the value of gold look like overlayed on that m1 chart?

Bohm Squad's picture

"Specilators":  "Wonderful fellers to make money..."  


Dermasolarapaterraphatrima's picture

"It takes a village to print that."

Michael's picture

OT but this billboard should be all over the US;

The giant sign on Franklin Road and North 21st Avenue features a photo of Holmes with the words, "Kills 12 in a movie theater with assault riffle, everyone freaks out," written under his picture, juxtaposed to a photo of Obama with the words, "Kills thousands with foreign policy, wins Nobel Peace Prize," written below.


Mactheknife's picture

36,000 or so slaughtered on our highways every year.  Obviously, we don't drive very well shouldn't our "nannystate" be talking about banning CARS? Maybe that's just population control since the "nannystate" designs and builds the highways or maybe TPTB don't feel that's a problem since they all fly.  <sarc off>

Bob Sacamano's picture

Appartently the US has concluded that in order to not harm its economy, 36,000 traffic deaths annually is acceptable.  But we have everyone freak out about less than 5,000 deaths from several years of war.  Doesn't make sense. 

Not insensitive about people dieing, but got to put our "outrage" in context. 

Maybe the most amazing thing about the Colorado killings is that it does not happen more often. 


jeff montanye's picture

i'm going to go with the key difference is the car deaths are accidents, the foreign policy deaths are not.

a result of this is the difference in public opinion/reaction to these deaths, particularly in muslim countries.  

plus we have killed way more than 5,000 people in these wars.  it isn't actually true that the only deaths that really count are the deaths of u.s. citizens.

TrustWho's picture

We lowered the flag to half mast because 12 people died unexpectedly in a Colorado movie theatre.

Same week, 9 of America's best young men died in Afganistan and few know this fact and fewer CARE.

TPTB_r_TBTF's picture

sorry to break this to you like this ... but umm, err, umm ...

those 9 were serving The Beast.


TrustWho's picture

No, these young men were tools of the beast, but they gave their lives to protect the American way of life. For example, Pat Tillman served his family, community, state and nation foremost!

If anyone serves the beast, it is American citizens who vote and support this crony capitalist system you apparently call THE BEAST.

malikai's picture

Everytime I hear the phrase "protect the american way of life" I am reminded of the same line from the end of the film "Spies Like Us".

It's about the same meaning, to me.

TrustWho's picture

Russians fight to protect their way of life. Chinese fight to protect their way of life. Kids in playground fight to protect their way of life.

The fight itself may be noble and may not be noble. (WWII most people agree, but not all)

The fact someone dies to protect another person is a noble act even for an ignobel cause. I think of the German generals speech to his defeated troops in "Band of Brothers"

Tanks-on-the-streets's picture

No, those nine were probably thinking "I hope I don't die in this shithole" and they did.  If most Soldiers knew what they were REALLY doing - PRESERVE THE PETRO DOLLAR, I would definitely short re-enlistment rates and be long AWOLs.

Bob Sacamano's picture

Re: Jeff M -- "i'm going to go with the key difference is the car deaths are accidents, the foreign policy deaths are not."

Wow.  Accidents?   100% of car deaths are avoidable if we want to.  Lower speed limit to 10 mph; outlaw cars; etc   But we have chosen that high speed, personal transportation and the economic benefits that go with it are worth 35,000 deaths per year.  No different than wars -- we have decided war deaths are worth the benefit (whatever that may be). 

Some folks in the world view their death and the death of others as a noble thing (see terrorists creed).  So in that sense I guess death counting gets messed up -- depends the world view of those doing the counting. 

AnAnonymous's picture

But we have everyone freak out about less than 5,000 deaths from several years of war. Doesn't make sense.


It makes sense. The same way the US does not bodycount the enemy.

So here goes the story: Muslims are a formidable force on the verge of overtaking the world and US citizens must step in to prevent that disaster.

US citizens must make the most of their few casualties as casualties are expected when fighting a global hegemon like Muslims.

And US citizens must not bodycount the enemy as the report of muslim losses would put a serious dent in the credibility of that formidable opponent.

Propaganda, giving credibility to spin etc

It is the way US citizenism works.

akak's picture

I am Mouse E. Dung, murderer of tens of millions of my fellow citizens (who are not bodycounted by official Chinese historical records of fabled recent past, just like the subhuman Tibetans whose lands we Han Chinese are expropriating and colonizing), and I approve this bigoted Chinese Citizenism message.

Bohm Squad's picture

Don't be ridiculous - Car manufacturers should be held liable for that!

Maybe background checks for car buyers is needed?  We could take a page from Mayor Bloomberg.

Hobbleknee's picture

I understand your point and agree, however car accidents are just that: accidents.  Killing innocents with drones in undeclared wars is done on purpose.

Bob Sacamano's picture

You do know we do not HAVE to have cars.  We have chosen to have cars (and allow them to exceed 5 mph) and are ok with 35,000 deaths from cars.  Could easily outlaw them and have no car deaths.  You can call them "accidents" but when something happens year in and year out with such regularity (35,000 deaths), that is most certainly not an "accident"  C'mon.

Triple A's picture

obviously brown people don't count.

TPTB_r_TBTF's picture

... and brown people who build their huts over strategic resources count for even less.

knukles's picture

If I'm elected I'll give that bust of Yomomma back to the Keynesian Keyans

China's picture

China very excited to see Zerohedgers continue to argue which party we support is best. It is important for the facade of Republicans Vs Democrats to continue for as long as possible to keep Amerikans busy while we ship gold from Hong Kong. Please get into an argument about who is to blame for our debt. Meanwhile, we team up with banksters. Thank you and remember, save save save. Buy gold now before collapse when deflation hits briefly before our friend Bennie Zim makes his move.

Mithril's picture

Fuck those Commi Bastards.. They have a taste of Freedom... Run that shithole Gov. into the ground.

China's picture

Mithril, you need to be sent to a re-education camp. Obviously, you have forgotten what is like to be American. Soon you will not speak so freely. Please return to trance like state in front of TV.

TrustWho's picture

Those Commi Bastards are making a statement in the Olympics. They may win the medal count.

Conax's picture

I hear they have that 'ribbon-and-stick-waving-while-jumping-around' gold medal sewn up.

Monedas's picture

The whole opening ceremony should be contracted out to North Koreans in costumes .... at least they would all keep in step .... and Kim Il Un could earn a little FX chicken scratch for his young bride !

TWSceptic's picture

give it to the banks, and off-shore the rest of the jobs.


so what's the difference with Obama again? His policies do exactly the same. Actually you could argue even more so...


Poor brainwashed Obama fans.

Beam Me Up Scotty's picture

The funniest part is, for all the reasons the Obama fans hates Bush, Obama triples down on just about all of them.  He is like Bush cubed!!

No more war---nope!!  Hes taken the War baton and ran even faster then Bush ever did.

Close Guantanamo--nope!!

Cut the deficit--nope!!  In fact they are giddy that he has exploded the budget, but they didn't like the Bush deficits.

Raised taxes?--nope!!  He floats the idea out there about raising taxes on the so called rich knowing full well it won't happen.  In fact he cut taxes even further with the 2% Social Security cut.

Good humor!!  Hate Bush but LOVE Obama doing it all even BETTER than Bush did.


Chuck Walla's picture


If I am elected I'll triple it, give it to the banks, and off-shore the rest of the jobs.




Mitt won't be buying the votes of the wealth eaters, asshole. Go back to Obama for America and think of something creative.  Like how to enslave millions more into welfare dependency. You got California, Illinois is coming along nicely. Obama is well on the way to his "Detroiting" of America. its working quite well and America, the system Obama now supports, alas, will continue to get his "fundamental change" after he wins again. Too bad the money ran out long ago... 


And, unless you are playng golf with the Duffer in Chief (DOTUS), you won't be getting any more money either. Welcome to the commune, Idiot!



ACP's picture

Yeah, but a "given" is really an empty promise...

...now if he said he'd add another digit, THAT would be a promise.

Like the Mic Dundee of money printing. "That's not money printing......(adds one more digit)...now THAT'S money printing!"

Mithril's picture

How would it be to be Ben an make $ shit up as you go along.Who gives a shit, it's al debt fiat.... Own guns and ammo....and metric tons of it. Tell the enforcers "we are the people from where you came! We are not the wrong... De Oppresso Libre. Freedom from Opression. Aka. JFK school of Freedom. Fuck the 322 enlighten ones.

gwar5's picture

All that money and nothing to show for it. Let's do some more.

Sudden Debt's picture

we even didn't get a free Tshirt....

Sudden Debt's picture


U S A !!! U S A !!!! U S A !!!!!