The money supply growth rate rose in October, climbing to a twenty-eight-month high. The last time the growth rate was higher was during July of 2017, when the growth rate was 5.07 percent. During October 2019, year-over-year growth in the money supply was at 4.95 percent. That’s up from September’s rate of 3.10 percent, and was up from October 2018’s rate of 3.49 percent. The increase in money-supply growth in October represents a sizable reversal of the trend we’ve seen for most of this year so far. In August, the growth rate hit a 120-month low, falling to the lowest growth rates we’d seen since 2007. Growth rates are still a long way from reaching the heights reached from 2009 to 2016, however. M2 and TMS/Rothbard-Solerno Measure, 1998-2019 - Click to
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The money supply growth rate rose in October, climbing to a twenty-eight-month high. The last time the growth rate was higher was during July of 2017, when the growth rate was 5.07 percent. During October 2019, year-over-year growth in the money supply was at 4.95 percent. That’s up from September’s rate of 3.10 percent, and was up from October 2018’s rate of 3.49 percent. The increase in money-supply growth in October represents a sizable reversal of the trend we’ve seen for most of this year so far. In August, the growth rate hit a 120-month low, falling to the lowest growth rates we’d seen since 2007. Growth rates are still a long way from reaching the heights reached from 2009 to 2016, however. |
M2 and TMS/Rothbard-Solerno Measure, 1998-2019 |
The money-supply metric used here — the “true” or Rothbard-Salerno money supply measure (TMS) — is the metric developed by Murray Rothbard and Joseph Salerno, and is designed to provide a better measure of money supply fluctuations than M2. The Mises Institute now offers regular updates on this metric and its growth. This measure of the money supply differs from M2 in that it includes treasury deposits at the Fed (and excludes short-time deposits, traveler’s checks, and retail money funds).
The M2 growth rate also increased in October, growing 6.65 percent, compared to September’s growth rate of 5.61 percent. M2 grew 3.38 percent during October of last year. The M2 growth rate had fallen considerably from late 2016 to late 2018, but has been growing again in recent months. Money supply growth can often be a helpful measure of economic activity. During periods of economic boom, money supply tends to grow quickly as banks make more loans. Recessions, on the other hand, tend to be preceded by periods of slow-downs in rates of money-supply growth. |
M2 and TMS, in billions of dollars, 1996-2019 |
Total Assets: Millions of U.S. Dollars, 2008-2019 |
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