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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory
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To: Tommaso who wrote (36314)7/19/2005 4:05:24 PM
From: Elroy Jetson  Read Replies (1) of 110194
 
You have observed a counting error. The expansion of the "Money Supply" has been growing far faster than the economy, and far faster than is reflected in the "Money Supply" figures.

I don't understand the money supply figures for the last two years. They seem quite disciplined, yet the expansion of credit via mortgages and refinancing mortgages has been huge.

New money creation for large mortgages is reflected in the "money supply" until it is spent outside the U.S. economy. An example would be a Home Equity Loan which is spent at Wal-Mart for goods purchased from China.

M3 includes some offshore U.S. Dollars in a category called "Euro Dollars", but many offshore U.S. Dollars are not included.
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