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The Money Supply Grew in November, But the Bigger Trend Is Way Down

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Money supply growth rose slightly in November, rising above October’s twenty-one-month low.

Even with November’s rise, though, money supply growth remains far below the unprecedented highs experienced during much of the past two years. During thirteen months between April 2020 and April 2021, money supply growth in the United States often climbed above 35 percent, well above even the “high” levels experienced from 2009 to 2013. As money supply growth returns to “normal,” however, this may point to recessionary pressures in the near future. 

During November 2021, year-over-year (YOY) growth in the money supply was at 7.0 percent. That’s up from October’s rate of 6.2 percent, and down from the November 2020 rate of 36.8 percent. Growth peaked in February 2021 at 39.1 percent.  

Historically, the growth rates during most of 2020, and through April of 2021, were much higher than anything we’d seen during previous cycles, with the 1970s being the only period that comes close.

tms

The money supply metric used here—the “true” or Rothbard-Salerno money supply measure (TMS)—is the metric developed by Murray Rothbard and Joseph Salerno, and is designed to provide a better measure of money supply fluctuations than M2. The Mises Institute now offers regular updates on this metric and its growth. This measure of the money supply differs from M2 in that it includes Treasury deposits at the Fed (and excludes short-time deposits and retail money funds).

M2 growth rates have been largely stable for the past sixth month, with the growth rate in November falling slightly to 12.7 percent. That’s down slightly from October’s growth rate of 12.5 percent.  November’s rate was well down from November 2020’s rate of 24.4 percent. M2 growth peaked at a new high of 27.0 percent during February 2021.

Money supply growth can often be a helpful measure of economic activity, and an indicator of coming recessions. During periods of economic boom, money supply tends to grow quickly as commercial banks make more loans. Recessions, on the other hand, tend to be preceded by periods of slowing rates of money supply growth. However, money supply growth tends to begin growing again before the onset of recession. As recession nears, the TMS growth rate typically climbs and becomes larger than the M2 growth rate. This occurred in the early months of the 2002 and the 2009 crises. A similar pattern appeared before the 2020 recession. Money-supply growth fell throughout much of 2019, and the economy appeared headed toward recession. However, the “lockdowns” and stay-at-home orders of the covid panic accelerated this process and ensured a sizable drop in economic activity. Massive stimulus then pushed money-supply growth up to record levels.  

Fed Stimulus and Declining Loan Growth

Money supply growth was fueled in part by enormous amounts of deficit spending that occurred throughout 2020 and 2021. This led to the “need” for large amounts of monetization by the Federal Reserve. (This was needed to keep interest on the national debt low.) Indeed, as federal deficit spending grew throughout 2020, Fed purchases of government bonds increased substantially as well. Since June of 2021, however, federal spending has fallen well below its earlier peaks levels. This has allowed the Fed to scale back its monthly asset purchases, and the growth in Federal Reserve assets has been slowing—although there are still no plans at the Fed to actually decrease total assets:

assets

Moreover, year-over-year growth in commercial loans has been negative since March of 2021, further putting downward pressure on money-supply growth.  Commercial and industrial loans in the US were down, year over year, 7.9 percent in November, and have been in negative territory since April of 2021. 

Another factor in declining growth rates is declining totals in Treasury deposits at the Fed. These totals are factored into the TMS money supply measure—but not with M2—and this total has declined from $1.7 trillion in July 2020 to $133 billion in November.

Overall, such a sizable drop in TMS growth in recent months continues to point toward a weakening economy. As commercial banks make fewer loans, they create less new money. And as the Federal reserve buy fewer assets, it creates less new money to do so. That’s good for price inflation, but a drop in new money can be a big problem for zombie companies, and bubble industries that rely on a constant influx of new money. 

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Maher: Biden Should Be in ‘a More Ceremonial Role’ – After ‘Not Horrible’ First Year, ‘America Has Lost Its Faith’ in Him

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On Friday’s broadcast of HBO’s “Real Time,” host Bill Maher argued Democrats should move President Joe Biden “into a more ceremonial role.” Because while his first year was “Not horrible, certainly better than the alternative,” “for some reason, America has lost its faith in Joe.” And “even when Joe does something good,” like the economy, “he seems to get no credit.”

Maher began by saying, “Democrats must thank President Biden for his great service to America, and then move him into a more ceremonial role.”

He continued, “Joe Biden has been president now for a year and a day. The day was pretty good. But the year? Not horrible, certainly better than the alternative, but for some reason, America has lost its faith in Joe. Sometimes that just happens. A new CBS poll has just over a quarter of Americans saying the country is going in the right direction, and the Quinnipiac poll has Biden’s year one approval rating at 33%, the lowest for any president ever, even Trump. 33%. If he were a movie, he’d be listed as ‘certified rotten.’ Now, of course, he’s not, and what’s gone wrong is certainly not all Joe’s fault, but the hard fact is, even when Joe does something good, he seems to get no credit. Our economy is actually pretty awesome considering what we’ve just been through. Wages are up, workers have more leverage, we avoided a recession, stocks just had their best year since 1995. And yet, only 38% approve of his handling of the economy. This is what happens when you lack passionate defenders, as opposed to Trump, who every day shit the bed, and 90% of Republicans blamed the bed.”

Maher added, “And Biden may well have even further to fall. Because there’s no die-hard Biden base. His is a coalition of the unenthused. … When he first got into office, I told you that Biden was like non-dairy creamer: nobody’s first choice, but he got the job done. And he did get the job done, in 2020, when his nation needed him to beat Trump, and he did. But, fair or not, to most people now, it looks like Joe Biden’s get-up-and-go got up and went.”

Maher further argued that Biden should marry former President Barack Obama so he can be back in the White House and run the country.

Follow Ian Hanchett on Twitter @IanHanchett

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Truckers Required to Show Proof of Vaccination to Enter the Country

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The Biden administration will not allow foreign truckers from Mexico or Canada to enter the country unless they provide proof of vaccination against the coronavirus.

Beginning Saturday, all non-citizens must show proof of vaccination at all ports of entry and ferry terminals when trying to enter the country.

Department of Homeland Security Secretary Alejandro Mayorkas said:

Starting on January 22, 2022, the Department of Homeland Security will require that non-U.S. individuals entering the United States via land ports of entry or ferry terminals along our Northern and Southern borders be fully vaccinated against COVID-19 and be prepared to show related proof of vaccination.

These updated travel requirements reflect the Biden-Harris Administration’s commitment to protecting public health while safely facilitating the cross-border trade and travel that is critical to our economy.

Before the new mandate, nonresident essential travelers have been allowed entry into the country regardless of their vaccination status. However, United States officials announced the vaccine mandate in October, hoping to incentivize more travelers to get vaccinated.

U.S. President Joe Biden delivers remarks on the Covid-19 response and the vaccination program at the White House on August 23, 2021, in Washington, DC. (Photo by JIM WATSON/AFP via Getty Images)

The mandate will likely hurt the ongoing supply chain crisis, as unvaccinated truckers traveling from Mexico and Canada will not be allowed entry into the country. The Canadian Trucker Alliance estimates at least 12,000 drivers will not be able to enter the United States due to the mandate.

Canada enforced a similar vaccine requirement for travelers entering its borders on January 15.

Brian Hitchcock, owner of MBH Trucking LLC and interim executive director of the Michigan Trucking Association, expects to lose two-fifths of his revenue due to the United States and Canada’s vaccine mandates. Hitchcock’s drivers travel back and forth from Michigan to Ontario, but only one-sixth of his employees are vaccinated.

“How do you force a mandate on a bunch of truck drivers who have been out there on the front line for 20 months and never asked for anything?” Hitchcock asked. “They were the ones that kept our economy moving and supplies (going), so you never ran out of food.”

Biden’s vaccine mandate will likely hit the automobile manufacturing industry the hardest. Auto Care Association Bill Hanvey warned the vaccination requirement could further strain the supply chain.

In a statement to NBC News, Hanvey said:

Due to the current supply chain issues and chip shortages that the American automotive manufacturers are facing … we believe any additional strains placed on the supply chain have the potential to exacerbate this situation and could cause the demands on both the automotive manufacturers and the aftermarket to rise even further

Doug Betts, president of J.D. Power’s global automotive division, made a similar warning.

By the time you map out the supply chain, it’s just a spider web going everywhere. I would be surprised if there are any (U.S.) cars that don’t have at least one Canadian-based part. Canada is a pretty important part of auto manufacturing. Any part that doesn’t arrive or if there’s something wrong with it, you can’t build it. There’s more points of failure.

Charles Sox, a supply chain expert and University of Cincinnati professor, mirrored Betts’s point. “Automobiles are very complex machines, they have thousands of component parts. It only takes one missing part to stop you from being able to complete that vehicle and sell it,” Sox said.

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Report: Detroit Man Accused of Setting Fire to Girlfriend Pregnant with Twins Bonds Out for $5,000

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A 41-year-old Detroit man accused of setting fire to his girlfriend, who is pregnant with twins, has bonded out of a Wayne County jail for just $5,000 after posting ten percent of his $50,000 bond, according to a report.

“Police said Devonne Marsh got into an argument with his girlfriend at their Detroit home off Packard and Outer Drive last Friday, Jan. 14, and he doused her with lighter fluid before setting her on fire,” WJBK reports.

According to the latest reporting from the outlet:

Devonne Marsh was released from the Wayne County Jail Friday morning. According to documents with the jail, he was released from custody just before 11:20 a.m. on Friday. He’s now out on bond with multiple conditions including no weapons, no drug use, and is ordered not to go to their shared apartment.

However, FOX 2 has learned that Marsh has a hold in Macomb County for other charges so while he’s posted bail in Wayne County, he is not currently free.

A man charged with setting his girlfriend – who was 6 months pregnant with twins – on fire, there was shock that his bond was set as low as $50,000 with 10%. Now, for just $5,000, he’s made bail. https://t.co/8PHFtDRtEY

— FOX 2 Detroit (@FOX2News) January 21, 2022

At about 10:40 on January 14, Detroit Police received a tip “that a woman was being held against her will and tortured,” according to WDIZ. At the scene, officers said they found the 26-year-old pregnant woman, with severe burns to her legs and stomach, lying on a bed in the basement of the home. Officers said she could hardly move.

The 26-year-old is in critical condition with burns to 60 percent of her body, and “It’s not yet known if her babies will survive,” WJBK reports. She is six and a half months pregnant.

“How do you do this to another human being? I can’t – it’s unimaginable,” Commander Michael McGinnis of the Detroit Police Department told WJBK. 

“Just incredibly traumatic injuries, I did see pictures and I mean the pain that she must be suffering – I can’t imagine,” he said. 

 Marsh, 41, was arrested and is charged with “kidnapping/abduction, aggravated/felonious assault and violation of the controlled substance act,” according to WDIZ.

He is a parole absconder with a lengthy rap sheet according to WJBK, including previous charges for guns, assault, and drugs.

“Marsh pleaded guilty in Macomb County Circuit Court to four counts of delivering more than 50 grams of cocaine in 2019 and was sentenced to two years probation,” Macomb Daily reports.

The victim had been too scared to report the abuse she was enduring, and Heaven of Oakland County CEO Aimee Nimeh told WJBK that victims often fear retaliation from their abusers when speaking up.

“Fear is part of the relationship and so absolutely there is fear of retaliation,” Nimeh explained.

She added that victims are often frightened by low bonds.

“The court system can be very overwhelming; the process can be complicated,” she said. “It’s not just that court is a little scary, it’s also that what happens next with that assailant that might be coming out, that might be walking free. How do you stay safe in that situation?”

McGinnis previously said he had hoped Marsh, who ended up making bond, remained in custody.

“We just hope that he remains in custody through the trial process so that the victim can heal without the fear of any kind of retribution from him,” McGinnis said.

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