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A.steve

Adjusted M4

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Adjusted M4 is alleged to have fallen by 3.5% recently - according to the Telegraph and Moneyweek.

I can't find much else about "adjusted M4" - searching in the BoE statistics doesn't yield any obvious series data... and Google is all but silent on the search term "adjusted M4" - leaving me bemused as to what sort of adjustment has been done.

Can anyone find either the series data or a clear indication of what this adjustment constitutes?

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Adjusted M4 is alleged to have fallen by 3.5% recently - according to the Telegraph and Moneyweek.

I can't find much else about "adjusted M4" - searching in the BoE statistics doesn't yield any obvious series data... and Google is all but silent on the search term "adjusted M4" - leaving me bemused as to what sort of adjustment has been done.

Can anyone find either the series data or a clear indication of what this adjustment constitutes?

It's M4 with Northern Rock taken out I think.

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I was being serious.

well as wells fargo adjusted their loan book losses by increasing the time when an account is declared in default from 120 days to 180 days, i think Injin has a point.

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well as wells fargo adjusted their loan book losses by increasing the time when an account is declared in default from 120 days to 180 days, i think Injin has a point.

I saw the number £50bn and jumped to an obvious conclusion.

Sorry. :o

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well as wells fargo adjusted their loan book losses by increasing the time when an account is declared in default from 120 days to 180 days, i think Injin has a point.

I fail to see the relevance. Did you read the articles to see the "adjusted M4" reference in context?

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The BoE does publish both "raw" M4 data and a seasonally adjusted version. Perhaps that's the adjustment they're talking about?

Edited to add link.

Edited by benj

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I fail to see the relevance. Did you read the articles to see the "adjusted M4" reference in context?

No, I see bankers issuing "Adjusted" figures. Wells Fargo "adjusted" their reported liabilities to paint a better picture. I expect M4 has a similar treatment for catwalk purposes.

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The BoE does publish both "raw" M4 data and a seasonally adjusted version. Perhaps that's the adjustment they're talking about?

Edited to add link.

Seasonally adjusted??? :blink::blink:

Is there less demand for money or something in winter??

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lets add in that the report is a provisional estimate.

Now, if as many money creation pundits say all money is created by the BoE, then one would expect them to have a pretty damn accurate account of how much more there is.

Proof, if any is required, that the private banking system creates its own money, is that they DO NOT have accurate figures on an hourly basis, let alone a guesstimate from a month ago.

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More at xmas etc

Spot on. Money obeys the laws of supply and demand just like everything else. At times of year when people make larger transactions and make them more often, they hold bigger money balances than they otherwise would.

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The BoE does publish both "raw" M4 data and a seasonally adjusted version. Perhaps that's the adjustment they're talking about?

Edited to add link.

Can you be more specific?

"Amounts Outstanding: Seasonally adjusted : Retail deposits and cash in M4 : M4 - LPMAUYN - Monthly" - for example, has not declined in any month during 2008 - let alone by 3.5% over three months as claimed in both articles.

Edited by A.steve

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Can you be more specific?

"M4 - LPMAUYN - Monthly" - for example, has not declined in any month during 2008 - let alone by 3.5% over three months as claimed in both articles.

Oh! Sorry, no, I have no idea which particular stats these articles are quoting. I was just trying to answer the "what is the adjustment" question. There seem to be millions of stats derived from broad money: M4 with retail deposits; M4 with retail deposits and wholesale deposits; M4 with retail deposits and bacon and M4; M4, M4, sausage, eggs and M4; M4, M4, M4, M4, M0, eggs, sausage and M4; or lobster Thermidor aux crevettes with a mornay sauce served in a Provencale manner with shallots and aubergines garnished with truffle pate, brandy and with a fried egg on top and M4. Take your pick.

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Oh! Sorry, no, I have no idea which particular stats these articles are quoting. I was just trying to answer the "what is the adjustment" question. There seem to be millions of stats derived from broad money: M4 with retail deposits; M4 with retail deposits and wholesale deposits; M4 with retail deposits and bacon and M4; M4, M4, sausage, eggs and M4; M4, M4, M4, M4, M0, eggs, sausage and M4; or lobster Thermidor aux crevettes with a mornay sauce served in a Provencale manner with shallots and aubergines garnished with truffle pate, brandy and with a fried egg on top and M4. Take your pick.

I've discovered that there's also a concept of a "Break adjusted level" - the description of which makes my head hurt.

Even this doesn't explain the articles - since neither:

LPMVUBO : Monthly break adjusted level of monetary financial institutions' sterling retail M4 liabilities to private sector (in sterling millions) not seasonally adjusted

nor

LPMVUBP : Monthly break adjusted level of monetary financial institutions' sterling retail M4 liabilities to private sector (in sterling millions) seasonally adjusted

Show a month-on-month decline for any consecutive months in 2008.

If that hasn't confused you about the nature of M4, then another recent discovery of mine might - M4 (every measure I've tested) is smaller than M3... which is, I have to say, somewhat counter intuitive.

P.S. I'm beginning to think that Ambrose E Pritchard just invented "adjusted M4" as a laugh to see if he could get away with it and to find out who would blindly copy.

Edited by A.steve

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LPMBD93 Monthly amounts outstanding of monetary financial institutions' sterling M4 liabilities to private non-financial corporations and households (Aggregate - OFCs) (in sterling millions) seasonally adjusted

LPMVVHN Monthly 1 month growth rate of monetary financial institutions' sterling M4 liabilities to private non-financial corporations (in percent) seasonally adjusted

LPMVVHQ Monthly 12 month growth rate of monetary financial institutions' sterling M4 liabilities to private non-financial corporations (in percent) seasonally adjusted

I've not looked at them

edit LPMVVHQ looks like the one; -0.5, from 16.2. Not sure what it means though :lol:

Edited by Ash4781

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If that hasn't confused you about the nature of M4, then another recent discovery of mine might - M4 (every measure I've tested) is smaller than M3... which is, I have to say, somewhat counter intuitive.

It's only counterintuitive if you expect four to be bigger than three. In which case, you're far too smart to work in banking. :)

In the UK, M4 used to be defined as M3 + shares in building societies + private sector deposits - building societies' holdings of cash, bank deposits and certificates of deposit. So it could potentially be smaller than M3 depending on what the building societies were up to. These days, though, I think the Sterling M3 measure has been discontinued and replaced by some sort of half-arsed estimate of what the European standard M3 measure would be if the UK measured the same monetary aggregates as the rest of Christendom.

It's bizarre, isn't it? Here we are in the middle of a worldwide financial meltdown and no-one can even put a number on how much money is in the system, let alone agree on how it's changing from month to month, let alone what its real significance is. What have we created?

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I've not looked at them

LPMBD93 : Monthly amounts outstanding of monetary financial institutions' sterling M4 liabilities to private non-financial corporations and households (Aggregate - OFCs) (in sterling millions) seasonally adjusted

Has risen every month in 2008

LPMVVHN : Monthly 1 month growth rate of monetary financial institutions' sterling M4 liabilities to private non-financial corporations (in percent) seasonally adjusted

Has the negative numbers... -2.1 -1 and -0.2 - so, numerically, this is a candidate... but, to me it looks nothing like the statistic I'd expect for "adjusted M4"... Might this actually suggest only that tight-fisted corporations have started have given their employees a pay rise... and they're about to go out on a shopping spree?

LPMVVHQ : Monthly 12 month growth rate of monetary financial institutions' sterling M4 liabilities to private non-financial corporations (in percent) seasonally adjusted

Only one negative number -0.5 in may.

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LPMVVHQ : Monthly 12 month growth rate of monetary financial institutions' sterling M4 liabilities to private non-financial corporations (in percent) seasonally adjusted

Only one negative number -0.5 in may.

that one was as close as i could get to the telegraph ;)

edit LPMVVII - 16.1 May yo -0.5 May

"In Britain, the Shadow Monetary Policy Committee - hosted by the Institute for Economic Affairs, and a refuge for UK monetarists - issued its own alert this week. The focus is on "adjusted M4", which covers loans to "private non-financial corporations" and may offer the best insight into the health of British business.

The growth rate has dropped from 16.1pc a year ago to minus 0.5pc in April."

Edited by Ash4781

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It's only counterintuitive if you expect four to be bigger than three. In which case, you're far too smart to work in banking. :)

In the UK, M4 used to be defined as M3 + shares in building societies + private sector deposits - building societies' holdings of cash, bank deposits and certificates of deposit. So it could potentially be smaller than M3 depending on what the building societies were up to. These days, though, I think the Sterling M3 measure has been discontinued and replaced by some sort of half-arsed estimate of what the European standard M3 measure would be if the UK measured the same monetary aggregates as the rest of Christendom.

It's bizarre, isn't it? Here we are in the middle of a worldwide financial meltdown and no-one can even put a number on how much money is in the system, let alone agree on how it's changing from month to month, let alone what its real significance is. What have we created?

I actually found M1, M2 and M3 (following the European model now currently adopted) to be extremely conceptually simple. It is M4 that just seems completely whacko.

http://www.bankofengland.co.uk/mfsd/iadb/notesiadb/M4.htm

M4 comprises:

The M4 private sector's (i.e. the UK private sector other than monetary financial institutions (MFIs)) holdings of:

1* sterling notes and coin;

2* sterling deposits, including certificates of deposit;

3* commercial paper, bonds, FRNs and other instruments of up to and including five years’ original maturity issued by UK MFIs;

4* claims on UK MFIs arising from repos (from December 1995);

5* estimated holdings of sterling bank bills;

6* from end-1986, 95% of the domestic sterling interbank (now inter-MFI) difference (allocated to wholesale deposits/other financial corporations, the remaining 5% being allocated to transits).

Component 1 seems sensible.

Component 2 isn't too mad - though I've never seen a "certificate of deposit", and don't see why it should be counted as well as a deposit... isn't that double counting?

Component 3 seems like comparing apples and oranges - since all these instruments have an uncertain current value... and the 5-year maturity seems somewhat arbitrary.

Component 4 seems sensible, ish... but I don't see how a NMFI holding can include a MFI repo - which I presume to be a repurchase agreement on a treasury or asset-backed paper recently deemed also acceptable.

Component 5 seems to be re-stating component 1 - but involving an estimate rather than a known amount. Surely the Royal Mint knows how many notes and coins there are?

Component 5 seems beyond bonkers - I'm completely lost as to what this is.

Edited by A.steve

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  • 395 Brexit, House prices and Summer 2020

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      • down 5% +
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