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Us Money Supply Plunges At 1930S Pace As Obama Eyes Fresh Stimulus

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

The M3 money supply in the United States is contracting at an accelerating rate that now matches the average decline seen from 1929 to 1933, despite near zero interest rates and the biggest fiscal blitz in history.

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.

Larry Summers, President Barack Obama’s top economic adviser, has asked Congress to "grit its teeth" and approve a fresh fiscal boost of $200bn to keep growth on track. "We are nearly 8m jobs short of normal employment. For millions of Americans the economic emergency grinds on," he said.

David Rosenberg from Gluskin Sheff said the White House appears to have reversed course just weeks after Mr Obama vowed to rein in a budget deficit of $1.5 trillion (9.4pc of GDP) this year and set up a commission to target cuts. "You truly cannot make this stuff up. The US governnment is freaked out about the prospect of a double-dip," he said.

The White House request is a tacit admission that the economy is already losing thrust and may stall later this year as stimulus from the original $800bn package starts to fade.

The US is not recovering properly because it's overleveraged, until the leverage has gone there will be no recovery.

Denniger has been banging on for quite awhile stating that there is no recovery it's merely govt spending keeping GDP up.

From what's being stated here that view is certainly supported.

Still the recovery is locked in and more stimulus is on the way to try and save the banks.

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Besides other economic reforms, monetarily and fiscally they need to dramatically expand federal spending right now. They will know when to back off when inflation starts becoming an issue. But like most nations in the same circumstance they are losing their will to go big and do what it takes. This is how nations slip into the long deflation seen in Japan.

On the bright side from what I was reading most of the $200 billion sounded like new government spending every year, not just a one off stimulus.

Remember my target when all this started.. the USA will have to deficit spend 4.5$ trillion a year for several years on end to get out. Well they are up around 1.7 trillion and maybe this will push it to 1.9 trillion. So still a long ways to go.

Edited by aa3

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They will print and print until they can't. Then everything will collapse.

True but it could go on go on for quite awhile. Like the credit bubble went on way longer than anyone thought it would last before it blew up. In all honesty they started it in the 1980's.. and it didn't blow up until 2007/2008.

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

"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.

Larry Summers, President Barack Obama’s top economic adviser, has asked Congress to "grit its teeth" and approve a fresh fiscal boost of $200bn to keep growth on track. "We are nearly 8m jobs short of normal employment. For millions of Americans the economic emergency grinds on," he said.

David Rosenberg from Gluskin Sheff said the White House appears to have reversed course just weeks after Mr Obama vowed to rein in a budget deficit of $1.5 trillion (9.4pc of GDP) this year and set up a commission to target cuts. "You truly cannot make this stuff up. The US governnment is freaked out about the prospect of a double-dip," he said.

The White House request is a tacit admission that the economy is already losing thrust and may stall later this year as stimulus from the original $800bn package starts to fade.

this is ******ing hilarious

just how did we end up being run by morons

Edited by lowrentyieldmakessense(honest!)

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

The US is not recovering properly because it's overleveraged, until the leverage has gone there will be no recovery.

Denniger has been banging on for quite awhile stating that there is no recovery it's merely govt spending keeping GDP up.

From what's being stated here that view is certainly supported.

Still the recovery is locked in and more stimulus is on the way to try and save the banks.

I too saw the report about M3 money supply.... strangely enough while we are clearly not out of the woods yet and stock markets have been through a considerable correction already I do feel that if the insiders felt that with all the info we now have that on balance we were going to go into free fall then the markets would have reacted by now ( even the daily mail is running the end is nigh type headlines)....... so while I won't reject the evidence out of hand or what it might mean I am not backing it as a nailed on certainty...... I really still feel that one way or another the powers that be will find a way to have a world economy which bobbles along over time and they will knock over the dangers one by one as they emerge.... I don't think we'll see huge growth etc , and do think govt intervention needs to continue otherwise things would unravle but |I am still not backing a collapse.

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  • 260 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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