Chart(s) Of The Day: Follow Where The Money Was, Is, And Will (Not) Be

Tyler Durden's picture

There is no shortage of money in the world. Thanks to global Central Banks' extreme activism money supply has exploded. Since August 2011, the Fed has been less of a full-time player in this effort but in passing the baton, the rest of the world did not let them down with most notably the ECB having taken over with its own version of free-money printing for much of the first quarter - driving the ratio of outside (central-bank-driven) money relative to inside (the bank themselves creating money via credit) to record highs as a stealth nationalization of credit is underway (though as we noted earlier this morning - the transmission mechanism is not working). So where oh where is all that hard-earned free-money going? The story bifurcates here. In the US, non-financial corporates have grown their war-chests as high as they have ever been (and continue to do so) after being burned by short-term financing stresses and knowing (despite all outward media appearances) that the next abyss is potentially around the corner (given real-life growth estimates becoming more and more binary/extreme as opposed to normalized with a range). In Europe, the 'excess' has flowed to the core driving, as Sean Corrigan notes, what some surveys suggest is a consumer and housing boom (read mal-allocation of capital once again) in the decade-long stagnant German real-estate market. All that extra cash, however, while helping revenues and margins for non-financial corporates in the US has left wage growth languishing. So the sad reality of the Keynesian 'multiplier' dogma is that rather than garbage-in, garbage-out - it is freshly printed money-in, nothing-out-to-the-real-economy as each actor in the game becomes increasingly driven by a sense of self-preservation. Is it any wonder that energy/raw materials prices (as evidenced most recently by Whirlpool's comments this morning) are rising when firms are awash in cash? But of course, as the old-saying goes, a-biflation-a-day-keeps-the-Fed-hawks-at-bay.

Real Money Supply growth is running well ahead of any empirical trend-line, thanks to central bank largesse...

Recently the Fed has taken a small step back (but money supply growth - red line below - remains stable in the US)...

But the ECB took over the mantle and replaced the banks as the ratio of Bank Money/Credit to ECB Money/credit crashed, as the stealth nationalization of credit continues...

But all that money has gone to one of two places - bank reserves at their central banks or more critically the balance sheets of non-financial corporates...

But as we know, this has done nothing for wage growth (lower pane - which stands well below any kind of empirical peak in growth - in fact sliding for over a decade now) while revenues (upper pane) have exploded (as have margins for the obvious reason) ending the miracle of the Central Bank transmission mechanism that solves all ills...

So summing up - Where has the cash come from? Central Banks. Where has it gone? Bank reserves and non-financial corporate balance sheet 'war-chests'. Where is it going? Nowhere into the real economy.

Charts: Sean Corrigan of Diapason Commodities

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
HedgeAccordingly's picture

anyway.. apple whipping the market again. green cloud over mosco - ES bids - 

whatsinaname's picture

Did the BOJ authorize more printing ? Wasnt that to happen anytime soon ?

Pinto Currency's picture




Mike Pollaro's work shows us how radically the Fed has increased a more pure measure of money (the AMS) which has higher immediate inflationary implications than M1 or M2:


The article above notes that the money supply growth is stable. 

Yes it is - and it is also increasing at a very high rate year-over-year.

HarryM's picture

After the recent drop , AAPL is officially tainted now - the magic is gone

Cognitive Dissonance's picture

"So summing up - Where has the cash come from? Central Banks. Where has it gone? Bank reserves and non-financial corporate balance sheet 'war-chests'. Where is it going? Nowhere into the real economy."

When those dogs of (inflation) war are eventually released from "reserves" we shall see some real fireworks.

Till then have a Brave Heart and hold......Hold......HOLD......HOLD......your precious metals bro.

Ghordius's picture

mixed metaphor! mixed metaphor, CD!

where has this liquidity come from? the glaciers

where is it going? the sinkholes and the dams

when are the dams going to...

Cognitive Dissonance's picture

My bad. I am a product of my TV culture.....the boob tube raising the progeny boob.

Guilty as charged. :>)

Ghordius's picture

you are too humble, CD, beware of this slippery slope leading you into the abyss of wisdom ;-)

Cognitive Dissonance's picture

Hi honey. Don't be jealous. He means nothing to me. :)

StychoKiller's picture

"This house of cards will fall like a bunch of dominoes -- checkmate!" -- Zap Brannigan

Crash N. Burn's picture

 Gonna be fun to watch the paper pushing presstitutes (say that 3x fast) when the E-trade baby has his upchuck moment.

E-Trade Baby – one day soon


Physical - accept no substitutes!

GeneMarchbanks's picture

'Where is it going? Nowhere into the real economy.'

That's where it has been going, doesn't mean it will be going.

kralizec's picture

No better than overpriced asswipe then...

LongSoupLine's picture

It all went into BAC between 10:42 and 10:50...8+M share ramp in less than 8 minutes.


Nah, nevermind...must be "retail coming back in".

Comay Mierda's picture

coming back to test the 50 day avg, still on light volume.  short this bitch when it hits $8.75

midgetrannyporn's picture

Federal Reserve bux will be shown for the sick joke they are.

Comay Mierda's picture

AAPL is about to start filling the gap and drag the entire market down

midgetrannyporn's picture

The horse crAAPLs don't fall far from the rump.

eddiebe's picture

The cart is squarely before the horse, no wonder the economy isnt going anywhere.

mayhem_korner's picture



Propping up toxic assets on banks' balance sheets so that they can pronounce them as "performing."  It is a truly diabolical means of keeping inflation "latent."

eurusdog's picture

The Pearson coefficient (R^2) on the first chart is proof the market is managed not free. Only confirms what we have known for years.

evolutionx's picture

is Illinois the Greece of the US?


according to CMA Default Probability is almost 40% and the state ranks among the Top 10 of

Sovereign Risk

(scroll down)

Dr. Engali's picture

Rham said there is no chance of Illinois defaulting.  Wait....where have I heard that before?

grid-b-gone's picture

An attempt to move some BLS-related jobs to Illinois was thwarted by an email campaign when some news orgs began to investigate. 

Some FL aviation investigation jobs were cut last week, but it's not clear if those are cuts or an attempt to transfer.

Beware the Rahm-O connection and the politicization of federal jobs for two reasons:

1. A backdoor attempt to save IL using federal job transfers at the expense of other states.

2. The desire to avoid another debt ceiling fiasco just before the election, though this will more likely be avoided by tapping federal pension funds temporarily or by other accounting maneuvers.

The Republicans may not be aggressively proactive on these moves, preferring to bring any instances up closer to the election. If you see federal jobs cut in your state, it may take a grass root effort to save them.

Personally, I think federal jobs cuts are needed, but there is some evidence that unnecessary worker trauma is being attempted just to help IL, with no net resulting national progress toward fiscal control.

metaforge's picture

Don't worry - they'll just pay their debt service in Illini Bux

midgetrannyporn's picture

The Bernank credo:


1) All inflation is good except for wage inflation.

2) All deflation is bad except for wage deflation.

Ben Burnyankme's picture

So, will anyone postulate what will be the driving factor for the non-financial war chests to open up and flood us with FRN's?  The bank balance sheets will never start leaking cash for that would mean lending.

donsluck's picture

Another irrelevent radical Christian fundamentalist.

BlackholeDivestment's picture

...slucky, did you even notice the title to the article? Lol. 

Are you not a fundamentalist and irrelevent commenter now? Lol. Brilliant!




ekm's picture

Just one little correction:

There is a huge shortage of money, but there is no shortage of currency.

SheepDog-One's picture

Money? Wat money? Its all just fake poker chips, but you dont have them and theyre redeemable nowhere anyway.