M3 wächst zu langsam... wie 1928-1929!

verfasst von Morpheus, 05.07.2003, 16:54

-->Here's an interesting statement from Harry Schultz, printed in the 6/23/03 issue of the HSL newsletter:

"Are you under the impression that Central Banks -- especially the U.S. Fed -- are pumping money and credit? That's a logical assumption, because their biggest guns tell us so. I thought so too, until I looked at the data. It's relative fiction. Increasing money supply somewhat, yes. Compared with the historic past, yes. But compared with recent past, no. Compared with their promises, no. Compared to the needs? Absolutely not!"

Schultz goes on to point out that the actual money supply numbers, looked at cold, do not amount to much until you have something to compare them to. He states that rate of change is all that counts, and I agree as this is something I've been preaching for years. I keep up a monthly chart of M3 money supply shown from a 10-month rate of change (ROC) standpoint. You'll note that M3 is in a significant downward trend as the overall money supply continues to lose momentum. As Schultz states,"When the rate of change declines you are shrinking at an increasing rate. What is not rising via rate of change is, by definition, shrinking -- the Accelerator Factor, an axiom of economic understanding!"

He adds,"To make it worse, not only is money supply shrinking lately, but the velocity of money is dangerously low," pointing out that this is the same pattern the Fed followed in 1928-1929, which of course led to the Great Crash and eventually to the Great Depression."If this hesitancy [to increase money supply] isn't stopped fast, we're headed into the same trap," wrote Schultz. Steve Saville, of the Speculative Investor, recently added to this observation,"...the year-over-year change in the total supply of U.S. dollars (M3), while still reasonably healthy by historical standards, it has plunged over the past 15 months. Furthermore, if the trend in money supply growth continues for another year then the money supply will start to contract (the U.S. will experience genuine deflation)."

To this end, the following quote from a recent Elliott Wave Financial Forecast newsletter adequately sums up the growing threat of deflation in the U.S. economy:

"The reason the Fed didn't use the word [deflation] is that it recognizes that deflation is a self-reinforcing psychological process. Once it gains a small place in people's expectations, it will feed on itself as consumers and businesses have no choice but to respond in ways that foster its development. The barrage of headlines over the last three weeks signals that deflation is truly at hand. In recent days, the Wall Street Journal has followed with stories noting that the underlying inflation rate is at a 37-year low and a special IMF task force assigned to study the deflationary risks in the world's 35 largest economies has found that there is actually some risk of it outside Japan. The IMF now says Germany, the United States, Singapore, China and 15 other countries could experience deflation. Now that deflation has its foot in the door, the only logical response is to take defensive action."

To this I can only add that the 1-2 years ahead should see extraordinary deflation across the stock and real estate sectors, as well as in the general economy, and"defensive action" is indeed imperative.

--Clif Droke
Jul 2, 2003
mail: clif@clifdroke.com
<ul> ~ Quelle</ul>

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gesamter Thread:

• M3 wächst zu langsam... wie 1928-1929! - Morpheus, 05.07.2003, 16:54
  • Re: M3 wächst zu langsam... wie 1928-1929! - Diogenes, 05.07.2003, 20:25
    • Re: @Diogenes / M3 wächst zu langsam... Chart Jan.1959 - Mai.2003 - Uwe, 07.07.2003, 14:18
  • Friedman hat letztens widerrufen... - kingsolomon, 05.07.2003, 20:38
  • Re: M3 w&amp;1076;chst zu langsam... wie 1928-1929! - CRASH_GURU, 07.07.2003, 00:29