6 ms·

M1 Money Stock

12 points by xqcgrek2 5y ago

nabla9 5y ago
Reason for the jump was a change in banking regulations. >Recognizing savings deposits as a transaction account as of May 2020 will cause a series break in the M1 monetary aggregate. Beginning with the May 2020 observation, M1 will increase by the size of the industry total of savings deposits, which amounted to approximately $11.2 trillion. https://www.federalreserve.gov/releases/h6/h6_technical_qa.htm https://www.federalreserve.gov/releases/h6/h6_technical_qa.h...
- h2odragon 5y ago
  https://fred.stlouisfed.org/graph/?g=IO4k https://fred.stlouisfed.org/graph/?g=IO4k
- paulpauper 5y ago
  it was pretty funny how ppl on twitter were freaking out about this without seeing the reason why it was so abrupt
- jazzyjackson 5y ago
  So the graph is basically showing two different datasets on the same plot line, nice.
axiosgunnar 5y ago
Note that apart from the obvious huge jump during Covid (2020), if you enable log scale, the supply is back to rising somewhat consistently.
anm89 5y ago
Note: M1 is not heavily followed or analyzed in the economics or finance world. It's frequently called narrow money and is basically cash and cash equivalents. Whereas most of the meaningful forms of liquidity in the economy exist as credit which doesn't get counted here but does get counted in M2(broad money) So I'd recommend to check out M2 as a more meaningful way to think about USD money supply. M2 has also skyrocketed over the same period https://fred.stlouisfed.org/series/M2SL https://fred.stlouisfed.org/series/M2SL Another interesting USD metric to track is the DXY, frequently referred to as the dollar index which comparatively tracks USD strength to a selected basket of currencies. Counterintuitive, although M2 growth is through the roof along with inflation the dollar is very strong right now from the DXY perspective, which I would interpret as USD is less bad then a lot of others right now https://www.marketwatch.com/investing/index/dxy https://www.marketwatch.com/investing/index/dxy
- unavoidable 5y ago
  Relatedly, a great primer on this concept has been written up by the Bank of England and IMO is a must-read for anyone who wants to know how money is "created". https://www.bankofengland.co.uk/-/media/boe/files/quarterly-bulletin/2014/money-creation-in-the-modern-economy https://www.bankofengland.co.uk/-/media/boe/files/quarterly-...
- creato 5y ago
  > M2 has also skyrocketed over the same period Over the long term on a log scale, it looks like M1 would still be pretty dramatic in the last few years, while M2 wouldn't look that weird, just a bit of a blip in 2020.
  - anm89 5y ago
    M2 is up 50% in three years. Coming off the end of a decade of strong m2 growth that is a pretty dramatic figure I'd say
- qeternity 5y ago
  > Another interesting USD metric to track is the DXY, frequently referred to as the dollar index which comparatively tracks USD strength to a selected basket of currencies. DXY is not all that interesting in reality (financial media aside). All other central banks basically act relative to the dollar (see BOE recently). The DXY is important for international trade or certain rates trades but not really related to money supply.
- pishpash 5y ago
  USD being the reserve currency helps here. Being a reserve currency means it's literally the backing collateral for other currencies (at least in great part). Of course other currencies are devaluing at the same rate, or those countries would have a financial crisis on their hands. USD or any currency measured against a basket of real assets though... well we know how that's been lately.
- hehetrthrthrjn 5y ago
  The dollar is strong right now because people are speculating that the inflation figures mean that interest rates will be higher sooner and that QE will be rolled back more quickly. The more an asset earns, the more it is worth.
newaccount2021 5y ago
Who is getting ready for the largest collapse since the South Seas Bubble?
calebm 5y ago
A related graph on Currency in Circulation (I assume this is the total worldwide?): https://fred.stlouisfed.org/series/CURRCIR https://fred.stlouisfed.org/series/CURRCIR If I'm reading it right, that's like a 23% increase on US dollars in circulation (anyone understanding that differently?). If this is true, that should amount to about 23% inflation in the last ~2 years.
arjunbajaj 5y ago
The sudden rise is because they started counting Savings in M1 in May 2021: https://fredblog.stlouisfed.org/2021/05/savings-are-now-more-liquid-and-part-of-m1-money/ https://fredblog.stlouisfed.org/2021/05/savings-are-now-more...

12 points by xqcgrek2 5y ago

Reason for the jump was a change in banking regulations. >Recognizing savings deposits as a transaction account as of May 2020 will cause a series break in the M1 monetary aggregate. Beginning with the May 2020 observation, M1 will increase by the size of the industry total of savings deposits, which amounted to approximately $11.2 trillion. https://www.federalreserve.gov/releases/h6/h6_technical_qa.htm https://www.federalreserve.gov/releases/h6/h6_technical_qa.h...

h2odragon 5y ago
https://fred.stlouisfed.org/graph/?g=IO4k https://fred.stlouisfed.org/graph/?g=IO4k
paulpauper 5y ago
it was pretty funny how ppl on twitter were freaking out about this without seeing the reason why it was so abrupt
jazzyjackson 5y ago
So the graph is basically showing two different datasets on the same plot line, nice.

axiosgunnar 5y ago

Note that apart from the obvious huge jump during Covid (2020), if you enable log scale, the supply is back to rising somewhat consistently.

anm89 5y ago

Note: M1 is not heavily followed or analyzed in the economics or finance world. It's frequently called narrow money and is basically cash and cash equivalents. Whereas most of the meaningful forms of liquidity in the economy exist as credit which doesn't get counted here but does get counted in M2(broad money) So I'd recommend to check out M2 as a more meaningful way to think about USD money supply. M2 has also skyrocketed over the same period https://fred.stlouisfed.org/series/M2SL https://fred.stlouisfed.org/series/M2SL Another interesting USD metric to track is the DXY, frequently referred to as the dollar index which comparatively tracks USD strength to a selected basket of currencies. Counterintuitive, although M2 growth is through the roof along with inflation the dollar is very strong right now from the DXY perspective, which I would interpret as USD is less bad then a lot of others right now https://www.marketwatch.com/investing/index/dxy https://www.marketwatch.com/investing/index/dxy

unavoidable 5y ago
Relatedly, a great primer on this concept has been written up by the Bank of England and IMO is a must-read for anyone who wants to know how money is "created". https://www.bankofengland.co.uk/-/media/boe/files/quarterly-bulletin/2014/money-creation-in-the-modern-economy https://www.bankofengland.co.uk/-/media/boe/files/quarterly-...
creato 5y ago
> M2 has also skyrocketed over the same period Over the long term on a log scale, it looks like M1 would still be pretty dramatic in the last few years, while M2 wouldn't look that weird, just a bit of a blip in 2020.
- anm89 5y ago
  M2 is up 50% in three years. Coming off the end of a decade of strong m2 growth that is a pretty dramatic figure I'd say
qeternity 5y ago
> Another interesting USD metric to track is the DXY, frequently referred to as the dollar index which comparatively tracks USD strength to a selected basket of currencies. DXY is not all that interesting in reality (financial media aside). All other central banks basically act relative to the dollar (see BOE recently). The DXY is important for international trade or certain rates trades but not really related to money supply.
pishpash 5y ago
USD being the reserve currency helps here. Being a reserve currency means it's literally the backing collateral for other currencies (at least in great part). Of course other currencies are devaluing at the same rate, or those countries would have a financial crisis on their hands. USD or any currency measured against a basket of real assets though... well we know how that's been lately.
hehetrthrthrjn 5y ago
The dollar is strong right now because people are speculating that the inflation figures mean that interest rates will be higher sooner and that QE will be rolled back more quickly. The more an asset earns, the more it is worth.

newaccount2021 5y ago

Who is getting ready for the largest collapse since the South Seas Bubble?

calebm 5y ago

A related graph on Currency in Circulation (I assume this is the total worldwide?): https://fred.stlouisfed.org/series/CURRCIR https://fred.stlouisfed.org/series/CURRCIR If I'm reading it right, that's like a 23% increase on US dollars in circulation (anyone understanding that differently?). If this is true, that should amount to about 23% inflation in the last ~2 years.

arjunbajaj 5y ago

The sudden rise is because they started counting Savings in M1 in May 2021: https://fredblog.stlouisfed.org/2021/05/savings-are-now-more-liquid-and-part-of-m1-money/ https://fredblog.stlouisfed.org/2021/05/savings-are-now-more...