Wednesday, May 2, 2012

Real Money Supply Growth vs. Recessions

The following chart shows inflation adjusted MZM money stock growth per capita (as a year over year percentage).


Click to enlarge.

The chart above suggests that we might want to start bracing for another recession at some point.


Click to enlarge.

In sharp contrast, this chart suggests that a recession is virtually impossible.

You want scary? What will happen to confidence if the impossible occurs?

"May you live in interesting times."

Source Data:
St. Louis Fed: MZM Custom Chart
St. Louis Fed: Federal Funds Rate

4 comments:

Stagflationary Mark said...

Note the behavior change in the first chart once interest rates peaked in the early 1980s (green dots vs. red dots).

Troy said...

"Recession" is a bogus measure.

CR's job-chart-from-hell is clear enough on that.

We did have a double-dip recession in the early 1980s, but that was just credit rationing to keep interest rates under 10%:

http://research.stlouisfed.org/fred2/graph/?g=6Uq

I don't see a double-dip coming now. Not that it's not possible for the recovery to peter out due to endogenous (DC gridlock) or exogenous causes (oil, crop disaster, AQ Strikes Back III, Europe dislocating global wealth flows), but even if things continue to get better, they're still pretty bad, so it's just getting less worse really.

One other endogenous dynamic is the 99ers are finally falling off the rolls. Maximum time on the dole is now 80 weeks in CA:

"Now that California no longer meets the unemployment rate threshold for FED-ED benefits for weeks of unemployment that begin after May 12, 2012, then EDD will have to cease all the final FED-ED payments will be for week ending May 12, 2012."

Initial claims back in early 2011 were running around 70,000/week, dunno how sticky the rolls are but if half are still collecting that would be 200,000 or so people being cut off from their last 20 weeks.

Ah, I see it's more like 25% have stayed on for the full term and are now getting booted:

http://economy.ocregister.com/2012/04/24/90000-californians-to-lose-unemployment-pay-in-may/107667/

Ah, later in that article I see she says total cut-off is 200,000 beneficiaries. And 900,000 people got $5B in benefits, $5000 per peep, so this is around a billion dollar hit to California's po' people and the business that predate on and/or serve them.

Stagflationary Mark said...

Troy,

Meet George Jetson!

Anonymous said...

George Jetson does not look well, LOL!!!