October 8, 2006
Where’s all the Money Coming From?
RodgerRafter
The Fed stopped counting M3 back in March, but you can still get a pretty good estimate of it by looking at a couple of other numbers they publish. Both of those numbers were rising at an accelerated rate already this year, and really took off in August and September.
Institutional Money Funds rose by about $10.6 billion per month for the first 7 months of the year, but rose by $27.6 billion in August and around $20 billion in September.
Large Time Deposits at Commercial banks in the US were rising at about $25 billion per month for most of this year, but rose by $31.9 billion in August probably even more in September.
The money has to come from somewhere. In this case it appears to be coming from two places. The first being that it is being squeezed out of the hands of average citizens, and the second is that it is being created in the form of new commercial debt.
Consumers aren’t borrowing as much as they used to. Consumer Credit was up only $5 billion in August, after rising $8.3 billion in July and $34.7 billion in Q2. Real Estate loans at commercial banks were actually down $0.6 billion in August after rising by about $30 billion per month for most of the year. With home prices stagnating, and consumers already overextended, credit appears to be tightening.
Read more…
The Fed stopped counting M3 back in March, but you can still get a pretty good estimate of it by looking at a couple of other numbers they publish. Both of those numbers were rising at an accelerated rate already this year, and really took off in August and September.
Institutional Money Funds rose by about $10.6 billion per month for the first 7 months of the year, but rose by $27.6 billion in August and around $20 billion in September.
Large Time Deposits at Commercial banks in the US were rising at about $25 billion per month for most of this year, but rose by $31.9 billion in August probably even more in September.
The money has to come from somewhere. In this case it appears to be coming from two places. The first being that it is being squeezed out of the hands of average citizens, and the second is that it is being created in the form of new commercial debt.
Consumers aren’t borrowing as much as they used to. Consumer Credit was up only $5 billion in August, after rising $8.3 billion in July and $34.7 billion in Q2. Real Estate loans at commercial banks were actually down $0.6 billion in August after rising by about $30 billion per month for most of the year. With home prices stagnating, and consumers already overextended, credit appears to be tightening.
Read more…
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