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Economy in Brief

Various Money Supplies are Showing the Impact of Stimulus
by Robert Brusca December 31, 2008

European money supply trends show that Yr/Yr money supply growth is steady or slowing slightly on a Yr/Yr basis (chart). Over other time horizons (see table) some stimulus is indicated. Inflation adjusted “real balances’ show a bit more stimulus. But credit growth in EMU is clearly slowing. If the objective of monetary stimulus has been to get credit growth higher, it is not working.

Across other select G-7 countries the same trends with money hold forth – Japan is an exception of sorts. The US and the UK show sharply escalating money growth rates over more recent periods. Japan shows nominal money growth is decelerating. But in terms of real balances US, UK and Japan real balance growth is expanding.

Still, the lesson in the Euro Area is telling. For all the monetary stimulus that is in train, there is little evidence that credit growth is being rekindled.


Look at Global and Euro Liquidity Trends
Saar-all Euro Measures (EA 15): Money & Credit G-10 Major Markets: Money Memo
  €-Supply M2 Credit:Resid Loans $US M2 ££UK M4 ¥¥Jpn M2+Cds OIL:WTI
3-MO 11.9% 2.9% 4.7% 14.5% 25.6% 0.0% -94.0%
6-MO 10.0% 5.9% 5.4% 7.8% 21.8% 1.5% -78.6%
12-MO 9.9% 8.4% 7.6% 7.6% 16.6% 1.8% -39.1%
2Yr 10.7% 10.3% 9.2% 6.7% 13.9% 1.9% -1.3%
3Yr 10.0% 10.7% 9.8% 6.2% 13.6% 1.4% -0.3%
Real Balances: deflated by Own CPI. Oil deflated by US CPI
3-MO 12.8% 3.7% 5.4% 27.6% 24.2% 2.8% -93.3%
6-MO 9.2% 5.1% 4.6% 9.9% 17.7% 0.9% -78.1%
12-MO 7.6% 6.2% 5.4% 6.5% 12.0% 0.8% -39.7%
2Yr 7.9% 7.5% 6.5% 3.9% 10.5% 1.1% -3.9%
3Yr 7.5% 8.2% 7.3% 3.6% 10.3% 0.8% -2.6%
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