US money supply plunges at 1930s pace as Obama eyes fresh stimulus

Source: The Telegraph

The M3 figures - which include broad range of bank accounts and are tracked by British and European monetarists for warning signals about the direction of the US economy a year or so in advance - began shrinking last summer. The pace has since quickened.

The stock of money fell from $14.2 trillion to $13.9 trillion in the three months to April, amounting to an annual rate of contraction of 9.6pc. The assets of insitutional money market funds fell at a 37pc rate, the sharpest drop ever.

"It’s frightening," said Professor Tim Congdon from International Monetary Research. "The plunge in M3 has no precedent since the Great Depression. The dominant reason for this is that regulators across the world are pressing banks to raise capital asset ratios and to shrink their risk assets. This is why the US is not recovering properly," he said.

The US authorities have an entirely different explanation for the failure of stimulus measures to gain full traction. They are opting instead for yet further doses of Keynesian spending, despite warnings from the IMF that the gross public debt of the US will reach 97pc of GDP next year and 110pc by 2015.

Read more: http://www.telegraph.co.uk/finance/economics/7769126/US-money-supply-plunges-at-1930s-pace-as-Obama-eyes-fresh-stimulus.html

Thats great, but if the government again funnels the money at the top it does nothing to stimulate spending.

They need more direct stimulus to the individuals where it will get into circulation with faster results.

Stop bailing out the Haves and help the Have Nots for a change.

K&R

as the rich will just have to be industrious in order to extract the wealth from the poor.

the idea that rich people won't work if their taxes are high is just complete horseshit. rich people will do whatever they think will get them richer. if taxes are high, working will still make them richer than not working (albeit not as much as if taxes were lower).

When you buy something, is is almost always from someone richer than you. You have to work to earn money. So instead of pyramids with the rich at the top, and needing "anti-gravity" to work as the natural flow.... I see a toilet with the rich at the bottom, and gravity pulling money towards them. You have to work to pump money up to yourself. The probelm today is that the government is adding water to the bottom of the toilet, rather than the top, leaving some nasty messes clinging to the sides of the bowl. It's only in my toilet model that trickle down actually works.

I just hope the corporations don't wind up flushing the whole damn works.

I was told that the reason banks and other institutions are paying such low interest rates is that the banks and brokerages are being flooded with money from Europe. U.S. banks don't have to pay high rates to get people to buy their CDs.

"Maybe someone should consider trying to reassure the labor market for a change."

along with some other positive indicators concerning the growth of the U.S. economy.

The M-3 is shrinking because other currencies are under pressure and banks are parking on dollars for now.

Think about all of those TARP dollars you got for next to nothing. You don't have to do anything... as the dollar rises, you can profit every day.

In the next 18months watch for a wave of U.S. banks taking over European assets.

Presto!
Half a trillion dollars to play with.

call me crazy, but if I recall correctly the various work programs of the depression worked because the money was applied directly to those who actually needed it.

more welfare for the rich.