Has anyone here noticed that the rate of monetary growth over the past year
or so has really slowed down?
The Fed stopped publishing the widest measure of monetary growth, M3
earlier this year. But of the remaining three stats that I am familiar
with, only M2 has seen a positive inflation adjusted growth of +0.9%
[+4.7% unadjusted]. The M1 is now at an adjusted (3.0%)[0.8%unadjusted].
The Monetary base is now at an adjusted (0.2%)[3.6% unadjusted].
I am no expert on such things, but it seems to me that it isn't a good
omen for this economy's future. The Fed can only loosen the money supply,
but if the borrowers do not borrow to expand the economy (which in this
system is represented by real expantion of the money supply) then we're in
a tough position. Should this not be a time for the Fed to begin
loosening?
