M1 isn't relevant since it merely shows transactional balances. If you want a measure of "consumer daily living funds", you should check currency in circulation. You should look at the data in a way that argues against what you believe>
That I precisely what I have done, it's your choice to ignore what I said, not mine. We are having an important discusson here, but I'm following consumer conditions by focusing on their payment or "transactional"accounts, which are increasingly in sad shape. M1 measures it best, and non M1 M2 picks up the housing windfalls.
On your argument that the Fed "won't allow it", yes that's the conventional cognoscenti playbook out there, but I once again depart company. FCBs are having twice the impact of the Fed, and thus are setting US monetary policy. If the FCBs are half assed (*)in their purchases of US securities, then the Fed (**)will really have to ratchet up their permanents. In the post-Katrina period they have been fairly aggressive it is true, but not enough, and also having the wrong effect (scaring FCBs).
(*) FCBs custodial holdings
8-31: 730,380
11-9: 741,717 (about 20% of 2004's purchase rate annualized)
(**)Fed SOMA:
8-31: 730,380
11-9: 741,717 (8.1% annualized, inflationary) |
