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

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Thu, 04/26/2012 - 11:24 | 2376755 nwskii
nwskii's picture

First Bitchez

Thu, 04/26/2012 - 11:45 | 2376828 HedgeAccordingly
HedgeAccordingly's picture

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

Thu, 04/26/2012 - 11:54 | 2376850 whatsinaname
whatsinaname's picture

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

Thu, 04/26/2012 - 14:09 | 2377032 Pinto Currency
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.

Thu, 04/26/2012 - 12:00 | 2376878 HarryM
HarryM's picture

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

Thu, 04/26/2012 - 15:49 | 2377798 _ConanTheLibert...
_ConanTheLibertarian_'s picture

Jesus grow up!

Thu, 04/26/2012 - 11:29 | 2376759 Cognitive Dissonance
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.

Thu, 04/26/2012 - 11:31 | 2376788 Ghordius
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...

Thu, 04/26/2012 - 11:38 | 2376807 Cognitive Dissonance
Cognitive Dissonance's picture

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

Guilty as charged. :>)

Thu, 04/26/2012 - 11:42 | 2376823 Ghordius
Ghordius's picture

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

Thu, 04/26/2012 - 12:05 | 2376895 donsluck
donsluck's picture

Get a room!

Thu, 04/26/2012 - 12:20 | 2376954 Cognitive Dissonance
Cognitive Dissonance's picture

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

Thu, 04/26/2012 - 22:03 | 2378962 StychoKiller
StychoKiller's picture

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

Thu, 04/26/2012 - 11:37 | 2376808 Crash N. Burn
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!

Thu, 04/26/2012 - 11:29 | 2376777 GeneMarchbanks
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.

Thu, 04/26/2012 - 12:03 | 2376885 kralizec
kralizec's picture

No better than overpriced asswipe then...

Thu, 04/26/2012 - 11:29 | 2376779 LongSoupLine
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".

Thu, 04/26/2012 - 11:33 | 2376795 Comay Mierda
Comay Mierda's picture

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

Thu, 04/26/2012 - 11:34 | 2376799 Cognitive Dissonance
Cognitive Dissonance's picture

I love the smell of Fed desperation in the morning.

Thu, 04/26/2012 - 11:56 | 2376858 hardcleareye
hardcleareye's picture

Smelled like … victory.

Thu, 04/26/2012 - 11:30 | 2376783 midgetrannyporn
midgetrannyporn's picture

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

Thu, 04/26/2012 - 11:31 | 2376787 Comay Mierda
Comay Mierda's picture

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

Thu, 04/26/2012 - 11:32 | 2376794 midgetrannyporn
midgetrannyporn's picture

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

Thu, 04/26/2012 - 11:55 | 2376796 eddiebe
eddiebe's picture

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

Thu, 04/26/2012 - 11:34 | 2376798 mayhem_korner
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."

Thu, 04/26/2012 - 11:37 | 2376804 eurusdog
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.

Thu, 04/26/2012 - 11:40 | 2376818 evolutionx
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)

Thu, 04/26/2012 - 11:53 | 2376847 Dr. Engali
Dr. Engali's picture

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

Thu, 04/26/2012 - 12:15 | 2376929 grid-b-gone
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.

Thu, 04/26/2012 - 14:22 | 2377434 metaforge
metaforge's picture

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

Thu, 04/26/2012 - 11:46 | 2376829 midgetrannyporn
midgetrannyporn's picture

The Bernank credo:


1) All inflation is good except for wage inflation.

2) All deflation is bad except for wage deflation.

Thu, 04/26/2012 - 11:58 | 2376865 Ben Burnyankme
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.

Thu, 04/26/2012 - 12:12 | 2376924 donsluck
donsluck's picture

Another irrelevent radical Christian fundamentalist.

Fri, 04/27/2012 - 03:49 | 2379416 BlackholeDivestment
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!




Thu, 04/26/2012 - 12:17 | 2376939 ekm
ekm's picture

Just one little correction:

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

Thu, 04/26/2012 - 13:10 | 2377164 SheepDog-One
SheepDog-One's picture

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

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