BELLAIRE CAPITAL MANAGEMENT, LLC
  • Home
  • About Us
    • Company News
    • Our Team
  • Services
    • Financial Planning >
      • Stage 1: Early Adult Planning
      • Stage 2: Planning as An Adult
      • Stage 3: Pre-Retirement Planning
      • Stage 4: Post-Retirement Planning
    • Small Business Planning >
      • Small Business Continuity Planning
    • Investment Strategies >
      • Saving For Retirement
  • Kevin's Corner
    • Investing Wisely Series...
    • Planning Wisely Series
  • Market Viewpoints Blog
    • ReCalc Blog
    • Register for Updates
  • Contact Us
  • Events

Monetary Base Update...

5/11/2012

 
Kevin Spires, CFA, FRM

The U.S. Monetary Base has exploded the past four years, but this explosion has not fed through into Consumer Prices -yet.  An interesting divergence has taken place over the past year that I believe is foreshadowing more pass through of the accumulated monetary stimulus into the Real Economy.
Picture
Over the past four years, the Monetary Base has expanded threefold, but Consumer Prices have remained quite low at around 2%.  One reason why Consumer Prices have been relatively stable with the explosion in the monetary base is that much of the increase in the Monetary Base was kept by banks as excess reserves at the Fed.  In other words, much of the Fed monetary stimulus was lying fallow and not being lent out to consumers. 

Over the past year, something has definitely changed in this dynamic.  While the Total Monetary Base is mostly flat, the Monetary Base adjusted for Excess Reserves is up over 10% - a clear divergence. 



Excess Reserves have started to drop and Bank Credit Growth is excelerating with C&I loans, Consumer Loans, and Real Estate Loans all expected to grow strongly over the next several quarters.  The Big Banks are finally turning all the monetary fuel into more lending.  On this basis along, I would be very skeptical that the Economy will head into a recession anytime in the next several quarters. 

Tell us your thoughts...


Comments are closed.
    Contact Us

    RSS Feed

    Archives

    March 2017
    May 2016
    December 2015
    March 2014
    February 2014
    December 2012
    October 2012
    August 2012
    July 2012
    June 2012
    May 2012
    April 2012
    March 2012

    Categories

    All
    2012 Election
    2016 Election
    Bank Credit
    Consumer Credit
    Corporate Profits
    Economic Outlook
    Employment
    European Debt Crisis
    Fed Balance Sheet
    Fed Watch
    Housing
    Leaders
    Liquidity
    Manufacturing
    Money Supply
    Stock Market Technicals

Contact Us
​All rights reserved by Bellaire Capital Management, LLC
​​LegalPrivacy PolicyDisclaimer
Live Chat Support ×

Connecting

You: ::content::
::agent_name:: ::content::
::content::
::content::