from Follow the Money

The Monkey Multiplier

July 8, 2009

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Blog posts represent the views of CFR fellows and staff and not those of CFR, which takes no institutional positions.

This is Mark Dow. Brad is still away.

There has been a lot of response to the assertion I made the other day that base money has not been growing since December, and that the money multiplier is not passing much of anything on to the broader economy or markets. The story that the Fed is printing money is just too strong to kill with a few facts. But, let me try again with a picture.

Here’s a chart I stumbled onto. It was Bloomberg’s chart of the day a couple of weeks ago. I do not know the research analyst from Westpac, an Austrialian bank, who put it together, and though I can verify his base money numbers, I cannot verify his M2 numbers. Nonetheless, the data fit what I know. Here’s the chart:

The M2 Money Multiplier vs Base Money, last 16 months

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