Thursday, January 10, 2013

$666 per person deposited into banks last month

Real nifty, during this Christmas season, almost $200B was deposited into commercial banks.   hmmm....I wonder if it was those "zombie consumers" who were so flush with cash, they paid for Christmas AND had an extra 666 dollars for every man woman and child in the US (that 666 each works out to around the $200B deposited into banks)

These charts are some seriously good stuff that I plotted from Fed data.
M2 per the Fed (aka FRED St. Louis) is supposed to represent "Household Wealth"
M2 includes a broader set of financial assets held principally by households.   Including of course, money in banks that the Fed just gave to them to "digitize their balance sheet" as the Bernank stated he would.    Not really Household wealth!
 M2 consists of M1 plus:
(1) savings deposits in banks (which include money market deposit accounts, or MMDAs);

(2) small-denomination time deposits (time deposits in amounts of less than $100,000); and (3) balances in retail money market mutual funds (MMMFs).
M1 is 
M1 includes funds that are readily accessible for spending. M1 consists of:
(1) currency outside the U.S. Treasury, Federal Reserve Banks, and the vaults of depository institutions; (2) traveler's checks of nonbank issuers;
(3) demand deposits; and
(4) other checkable deposits (OCDs), which consist primarily of negotiable order of withdrawal (NOW) accounts at depository institutions and credit union share draft accounts

Hmmm....look at those two ovals in the charts below, do ya think we might have some serious inflation right around the corner?

Do you think that gold might be more valuable to people as money is printed and cash in the bank loses value at over 10% per year?

I have about as much respect for the "Deflationista's" as I do for Barista's, well actually I do respect the Barista's more....working people, performing a desired service.


  1. the 1930s taught us that a deflationary depression is just as possible as a 1970s inflationary depression. which will the next decade be? Kondratiev suggests that a deflationary winter is coming to counterbalance the 1970s inflationary summer. Elliott Wave principle suggests that PMs have had their 5 waves up and are eventually due a correction (gold and silver are already in confirmed downtrends for the past few months). and demographics may make the most convincing fundamental case for deflation.

    despite the massive whale with a government-granted monopoly charter (the Fed) and other abominable central banks around the world, the vast majority of money creation is in the form of loans that originate in the private sector. a growing working-age population produces more money by borrowing more. a declining labor force in a recession borrows less and reduces money creation. an aging population pays down debt and extinguishes part of the money supply. such would explain the persistent deflation in Japan, despite fiscal and monetary stimulus.

    the 1970s inflation was enabled by central banks and government spending, but (as Harry Dent argues using birth rate data, adjusted for immigration, and population data for specific age cohorts) was made possible by the Baby Boomers moving out of their parents' homes, increasing their income, and buying homes and stuff of their own. Now the reverse is occurring. Baby Boomers are retiring, reducing their income, and paying down debts. The Echo Boom (Millennials) is much smaller than the Baby Boomers they are replacing and less wealthy. Family formation rates are lower as more stay with family rather than get their own place (rent or own). Birth rates have fallen as the economy struggles and social mood is depressed. The Baby Boomers' retirements and the next generation's "failure to launch" is a deflationary event just as Baby Boomers coming of age and entering the labor force was an inflationary event.

  2. asset prices must decline as 77 million baby boomers must sell their assets for living expen$e$. how can they get a strong price when sellers outnumber buyers? a larger and wealthier cohort of baby boomers must liquidate their assets, but their counterparty would be a younger and smaller and less wealthy generation behind them. this is visually represented with the population graph starting at 10:45


Insightful and Useful Comment!