Money Supply Update: Shorter- and Longer Term Growth Rates Are All Heading Down

Either way you look at it, the U.S. money supply growth rate is falling, in some cases sharply (39 weeks- and one year basis). 

YTD, the money supply has hardly moved at all being up just 0.18%. This compares to an average annual expansion of 7.2% since 1986.

This is of grave importance as it is during such times that the unsustainability of the previous expansion is revealed. In real life, this usually means sharp falls in a range of asset prices such as stocks and real estate and a GDP recession.

Purely based on monetary developments, the probabilities of a stock market correction or even a crash are hence growing ever larger. 

At the same time, the government is quickly running out of cash as deposits with the Fed (which forms part of the money supply) have now dropped to just $82 bn.

Recommended reading:

The Austrian Theory Of The Business Cycle - A Short Synthesis