US money trends at odds with hawkish Fed

US broad money growth has normalised even as the numbers remain inflated by the tail end of the Fed’s QE programme. The broad money measure calculated here – “M2+”, which adds large time deposits at commercial banks and money fund balances to the official M2 measure – rose at an annualised rate of 5.4% in […] Continue reading

Has the Chinese economy bottomed?

The Chinese economy regained some momentum around year-end, as had been suggested by a turnaround in six-month real money growth in mid-2021. Monetary trends remain moderately hopeful but the recovery faces challenges from covid disruption, slowing global demand and ongoing property sector weakness. Most official economic data are presented as year-on-year growth rates. Chart 1 […] Continue reading

Inflation lessons from the 1970s

Why did high inflation become entrenched in the 1970s? The consensus view is that an initial inflation shock became embedded in expectations, resulting in inflationary price- and wage-setting behaviour. The “monetarist” view is that the underlying driver was sustained high money growth, which played a key role in allowing inflation expectations to become dislodged. A […] Continue reading

Global real money squeeze approaching recession threshold

Global real money trends were signalling economic weakness before Russia’s invasion of Ukraine. The consequent spike in commodity prices threatens a recession warning signal. Global six-month real narrow money growth – the key monetary leading indicator followed here – turned negative before the six global recessions preceding the covid shock – see chart 1. The […] Continue reading