56.2 Is The Money Boom Is Already Here? NO!

———Part 2 Summary———

Learn why a HISTORIC surge of M2 money supply is NOWHERE near-enough to rescue the world economy. Across a group of mostly rich nations M2 and M3 are at multi-decade highs. And yet millions remain unemployed. What’s missing? Money!

———Episode 56 Intro———

Space, the final metaphor. Why do central bankers offer spirographic, retrograde answers? Because they operate within a Ptolemaic paradigm – a geocentric model of our monetary system in which the central bank is the hub around which all else revolves. Why is unobservable, offshore credit fundamentally important? Because like dark matter and dark energy, this shadow money represents the broad majority of material and heat that constitute our monetary universe.

Which brings your podcaster to the 21st chapter of “The Courage to Act” authored by Ben Bernanke. There, the former chairman defends the Fed’s second quantitative easing in 2010 because of an economic “false dawn”. No mere rhetorical flourish, the false dawn is a regular astral phenomenon. Each autumn and spring, the northern and southern latitudes respectively, will observe a triangular diffusion of light rising above the horizon. It seems to herald recovery from the darkness.

But Sol won’t come. Not yet at least. Light, yes. But the wrong kind. Instead of a medley of warm colors refracted by the near atmosphere, the false dawn is a sterile white, originating far beyond our Earth, in cold space. Officially known as the Zodiacal Light, we witness interplanetary dust particles reflecting sunlight.

Perhaps not surprisingly, Bernanke’s book had no further chapters on economic false dawns despite their taking on an astronomical regularity, arriving again and again and again in 2011, 2014 and 2017. Jeff Snider, part-time monetary sleuth and full-time cosmos student, recognizes the difference between reflation’s false dawn and recovery’s warm glow. In this, the 56th episode of Making Sense, we review the light coming over the horizon from negative repo rates, surging M2 money supply and rising US Treasury yields. We find it cold, fallow and gray.

———See It———

AlhambraTube: https://bit.ly/2Xp3roy
Twitter: https://twitter.com/JeffSnider_AIP
Twitter: https://twitter.com/EmilKalinowski
Art: https://davidparkins.com/

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———Ep 56.2 Topics———

00:05 People who believe inflation is about to take hold can point to measures of M1 and M2
01:40 We look at two graphs that show the largest increase in M2 since the 1940s
02:25 The OECD’s M3 measure for 30+ countries shows a similar surge. What is M2 money?
04:32 February’s Headline and Core CPI were very low. But M2 growth is very high! What?
07:49 The Federal Reserve changed the definition of M2 – what does that mean?
09:06 The Federal Reserve knew in the 1970s that M2 was woefully incomplete – 50 YEARS AGO!!
13:22 M2 measures onshore dollars – so what is the point?! Offshore dollars DOMINATE! Overwhelm!
14:46 What is missing from M2? Asset-backed securities, bank credit.
19:34 Yes, M2 is surging. But also, CPI is trawling.

———Ep 56.2 References———

What *Must* Lie Beyond the M’s: https://bit.ly/3rEq19L
Taking You, The Fed’s Bank Reserves, And Banks’ Checkable Deposits For A Quick Stroll In The Monetary Zoo: https://bit.ly/2PRhRwE
Alhambra Investments Blog: https://bit.ly/2VIC2wW
RealClear Markets Essays: https://bit.ly/38tL5a7

———Who———

Jeff Snider, Head of Global Investment Research for Alhambra Investments with Emil Kalinowski, sweet on M1&M2s. Art by David Parkins, on an errand, sent by grocery store clerks, to collect a bill. Podcast intro/outro is “Departure Lounge” by Brendon Moeller at Epidemic Sound.