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Economy in Brief

Most Money Supplies Speed Up A Bit
by Robert Brusca July 28, 2010

While money supplies have speeded up a bit over three months compared to six months there is no great monetary stimulus in the offing. In the UK there is a set back.

Despite all the concerns about the huge excess bank reserves in the US. Those reserves are just sitting there being unproductive – worse being counter productive as their very presence haunts the outlook for future inflation, at least for some. US and EMU money supply growth (Yr/Yr) have fallen off sharply over the past year or so but both have started to stabilize and even show some minor acceleration very recently. In the near term UK M4 growth has dropped off sharply. Still the big picture point is that there is little in the way of monetary stimulus in the making- despite some concerns to the contrary.

In the UK M4 growth has been a wild ride, but deflated for prices M4 is now contracting over three months, the only country in the table to do that. Japan’s nominal and real balance growth continues to improve, but that is at a slow pace.

The monetary data are right now not very reassuring for growth. They are not distressing about inflation but given extent of the excess reserves in the US there will continue to be concerns about what will happen when the economy does pick up. Money growth is no impediment to economic growth but neither is it much of a stimulant.

In the Euro-Area credit and loan growth both have picked up a bit and that is a hopeful sign that dove-tails with other brighter recent economic reports.

Look at Global and Euro Liquidity Trends
Saar-all Euro Measures (E13): Money & Credit G-10 Major Markets: Money Memo
  €-Supply M2 Credit:Resid Loans $US M2 £UK M4 ¥Jpn M2+Cds OIL:WTI
3-MO 3.5% 4.4% 4.8% 4.1% 0.3% 4.2% -25.4%
6-MO 2.8% 2.3% 2.8% 1.6% 17.9% 3.1% 1.6%
12-MO 1.9% 1.2% 1.1% 1.8% 11.5% 2.9% 8.2%
2Yr 3.9% 2.3% 1.5% 5.4% 11.8% 2.7% -24.8%
3Yr 6.0% 5.4% 4.2% 5.8% 11.5% 2.5% 3.9%
Real Balances: deflated by Own CPI. Oil deflated by US CPI
3-MO 3.3% 4.2% 4.6% 5.6% -1.5% 5.9% -24.3%
6-MO 1.7% 1.2% 1.8% 1.9% 14.0% 3.3% 1.9%
12-MO 0.4% -0.2% -0.3% 0.7% 8.0% 3.6% 7.0%
2Yr 3.2% 1.6% 0.8% 5.5% 9.0% 4.0% -24.7%
3Yr 4.2% 3.7% 2.5% 4.2% 8.3% 2.7% 2.3%
Japan's Latest CPI is estimated to complete this table
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