{"id":2708,"date":"2008-12-15T12:47:44","date_gmt":"2008-12-15T12:47:44","guid":{"rendered":"https:\/\/mmm.9dotdigital.ca\/?p=2708"},"modified":"2025-03-27T15:48:45","modified_gmt":"2025-03-27T15:48:45","slug":"more-hopeful-signs-from-us-money-trends","status":"publish","type":"post","link":"https:\/\/mmm.9dotdigital.ca\/?p=2708","title":{"rendered":"More hopeful signs from US money trends"},"content":{"rendered":"<p>A <a href=\"http:\/\/www.moneymovesmarkets.com\/journal\/2008\/11\/27\/glimmers-of-hope-from-m1-pick-up.html\">previous post<\/a> drew attention to a sharp pick-up in US narrow money M1 &ndash; currency and checkable deposits, adjusted for flows into sweep accounts. This acceleration continued in November, with the annual rate of change reaching 13%.<\/p>\n<p>Broader aggregates are also now showing signs of improvement. Annual growth of M2 &ndash; M1 plus savings deposits, small time deposits and retail money funds &ndash; rose to a five-year high of 7.6% in November. Over the last 13 weeks M2 has risen at a 17% annualised rate &ndash; see first chart.<\/p>\n<p>The M2 acceleration may partly reflect the Fed&rsquo;s recent purchases of commercial paper &ndash; $312 billion since October &ndash; and plans to buy mortgage-backed securities should give a further boost. The latter initiative has contributed to a sharp fall in mortgage rates and a surge in refinancing applications &ndash; second chart.<\/p>\n<p>Milton Friedman&rsquo;s old rule of thumb is that the money supply leads the economy by about six months and inflation by about two years. The recent pick-up, if maintained, suggests the economy will hit bottom some time in early 2009, while fears of sustained deflation are unwarranted.<\/p>\n<p>&nbsp;<span class=\"full-image-block ssNonEditable\"><span><img decoding=\"async\" src=\"\/storage\/US-money-supply-M2-1208.jpg?__SQUARESPACE_CACHEVERSION=1229688917406\" alt=\"\" \/><\/span><\/span><\/p>\n<p><span class=\"full-image-block ssNonEditable\"><span><img decoding=\"async\" src=\"\/storage\/US-mortgage-apps-1208.jpg?__SQUARESPACE_CACHEVERSION=1229350160516\" alt=\"\" \/><\/span><\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>A previous post drew attention to a sharp pick-up in US narrow money M1 &ndash; currency and checkable deposits, adjusted for flows into sweep accounts. This acceleration continued in November, with the annual rate of change reaching 13%. Broader aggregates are also now showing signs of improvement. Annual growth of M2 &ndash; M1 plus savings [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[3],"tags":[],"class_list":["post-2708","post","type-post","status-publish","format-standard","hentry","category-money-moves-markets"],"_links":{"self":[{"href":"https:\/\/mmm.9dotdigital.ca\/index.php?rest_route=\/wp\/v2\/posts\/2708","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/mmm.9dotdigital.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/mmm.9dotdigital.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/mmm.9dotdigital.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/mmm.9dotdigital.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=2708"}],"version-history":[{"count":1,"href":"https:\/\/mmm.9dotdigital.ca\/index.php?rest_route=\/wp\/v2\/posts\/2708\/revisions"}],"predecessor-version":[{"id":5017,"href":"https:\/\/mmm.9dotdigital.ca\/index.php?rest_route=\/wp\/v2\/posts\/2708\/revisions\/5017"}],"wp:attachment":[{"href":"https:\/\/mmm.9dotdigital.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=2708"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/mmm.9dotdigital.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=2708"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/mmm.9dotdigital.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=2708"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}