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The Federal Reserve recently discontinued updating the M1 and M2 weekly money supply series and is instead updating the series monthly.
Steve Hanke, professor of Applied Economics of Johns Hopkins University, said that this change reflects a change in attitude from the world's largest central bank on the importance of looking at money supply.
"Chairman Powell has very explicitly claimed that money doesn't matter in recent testimony. He's basically said that money and the measurement of money doesn't really matter because it's unrelated to inflation," Hanke said.
These money supply series have been published since the 1970s, and the fact that the Fed has changed the publishing frequency on M1 and M2 money supply from weekly to monthly demonstrates a change in worldviews, Hanke said.
"In principle, they don't think [this data] is important. They want to deep-six the monetarists, basically and push them off to the sidelines. They want to bury Milton Friedman once and for all and be done with it, and their preference would probably to not report any monetary statistics," he said.
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Starting on February 23, 2021, the H.6 statistical release is now published at a monthly frequency and contains only monthly average data needed to construct the monetary aggregates. Weekly average, non-seasonally adjusted data will continue to be made available, while weekly average, seasonally adjusted data will no longer be provided. ...
... the biggest news of the day may not be the crash in cryptos or even the Fed Minutes, but what the Fed published at 1:15pm ET when it revealed that in the latest overnight repo, 43 counterparties parked reserves worth $294 billion with the Fed, a number which not only surpassed the March 2020 covid crisis highs, but was the highest since 2017!
As Pozsar noted on Monday, "use of the facility has never been this high outside of quarter-end turns, and the fact that the use of the facility is this high on a sunny day mid-quarter means that banks dont have the balance sheet to warehouse any more reserves at current spread levels."
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The Fed announced late Wednesday that it will unwind one of the most iconic bailout facilities of the Pandemic era, namely its holdings of corporate bonds, junk bonds, bond ETFs, and junk bond ETFs that it had purchased last year. The Fed said it will outright sell them.
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The facility, set up in a Special Purpose Vehicle (SPV) that the Fed calls Secondary Market Corporate Credit Facility (SMCCF), was iconic not because of its size, which was endlessly hyped in the media at the time as a $750-billion bond-buying giant though it never got close; but because of its previously forbidden nature.
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As small as this facility may be – $13.8 billion being small only by the Fed’s standards of money-printing and bailing out – unwinding these holdings is nevertheless another baby step toward removing support from the market.
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If the Fed averages $30B a week increase, the balance sheet should hit $8T in about 29 weeks - just over half a year.
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The extent of "quantitative tightening" reported by the Fed yesterday is still far below the Fed's initial claim that it would be running off $60 billion of government debt per month and $35 billion of mortgage debt. The Fed's assets appear to have peaked in the weekly reports on March 23 at $9,012 billion and yesterday's report was $8,924 billion. ...
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However, according to the latest report from Joe Foster, portfolio manager and strategist, and Imaru Casanova, deputy portfolio manager of the VanEck International Investors Gold Fund, the Federal Reserve could be closer to the end of it aggressive tightening cycle than markets currently expect.
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... they said that the central bank could face growing political pressure to end its tightening cycle as rising interest rates will make servicing its debt more expensive.
The Federal Reserve's balance sheet, while falling, is valued at $8.8 trillion.
Quoting data from the Wall Street Journal, Foster and Casanova said that if the Fed raises interest rates to between 3.25% and 3.50%, it would cost the Treasury $195 billion annually to fund the U.S. central bank.
"As the targeted Fed Funds rate (currently 2.5%) rises above 3%, the interest it pays will exceed the revenue gained from its portfolio assets," the analysts said.
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Most of the $25 trillion in U.S. debt matures in one to five years and will have to be repaid by borrowing at higher rates if interest rates rise.
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Isn't it moreso a question of, how high can rates go for how long?The Fed cannot "go full Volcker" raising interest rates to tame inflation because of debt service constraints.
At that rate it'll all be gone by Summer 20278/11/22 - $8.928T ($4B increase from week prior)
8/18/22 - $8.899T ($29B decrease from week prior)
8/25/22 - $8.901T ($2B increase from week prior)
9/1/22 - $8.874T ($27B decrease from week prior)
9/8/22 - $8.872T ($2B decrease from week prior)
9/15/22 - $8.882T ($10B increase from week prior)
9/22/22 - $8.866T ($16B decrease from week prior)
9/29/22 - $8.844T ($22B decrease from week prior)
10/6/22 - $8.808T ($36B decrease from week prior)
At that rate, according to my back of the napkin arithmetic, (if it is correct, and it may not be lol), they'll have it all gone by mid 2029 or so.10/13/22 - $8.808T (no change from week prior - 1st time I ever see this)
10/20/22 - $8.793T ($25B decrease from week prior)
10/27/22 - $8.772T ($21B decrease from week prior)
11/3/22 - $8.726T ($46B decrease from week prior)
So far, the Fed has been able to maintain a shrinking balance sheet.
At that rate, according to my back of the napkin arithmetic, (if it is correct, and it may not be lol), they'll have it all gone by mid 2029 or so.
In your post I quoted, their balance sheet was reduced by $92B in 22days. Isn't that approx $4.3B/day? So where you getting the $25B/Month number at? They refuced by that much in just the week of the 20th per your post.8.726T / 25B = 349 easy payments / 12payments/year = 29 years + 2022 = November 2051
I'm glad to see I'm not the only one here that has that problem sometimes. LolAh hell. My bad. It's actually $25B per week, not month. The Fed publishes their data every Thursday afternoon.
That's what I get for doing math first thing in the morning.
8.726T / 25B = 349 easy payments / 52payments/year = 6.7 years + 2022 = mid 2029 as you said.
Total household debt balances continued their upward climb in the third quarter of 2022 with an increase of $351 billion, the largest nominal quarterly increase since 2007. This rise was driven by a $282 billion increase in mortgage balances, according to the latest Quarterly Report on Household Debt & Credit from the New York Fed’s Center for Microeconomic Data. Mortgages, historically the largest form of household debt, now comprise 71 percent of outstanding household debt balances, up from 69 percent in the fourth quarter of 2019. An increase in credit card balances was also a boost to the total debt balances, with credit card balances up $38 billion from the previous quarter. On a year-over-year basis, this marked a 15 percent increase, the largest in more than twenty years. ...
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In conclusion, the aggregate data in our Quarterly Report on Household Debt and Credit point to large increases in credit card balances, accompanied by increases in other types of balances as well. New purchases adding to the credit card balance reflect robust demand amid higher prices of goods and services. The CCP sheds light on the more rapidly increasing debt burdens and delinquency of the younger and less wealthy card holders, and may suggest disparate impacts of inflation. However, though delinquency rates are rising they remain low by historical standards and suggest consumers are managing their finances through the period of increasing prices.
I haven't looked in a bit, are the yield curves still inverted?
Ten? It's nearly done that in the last two years.Do you think or imagine that in 10 years the $USD could be worth 50% less than it is today?
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Compared to a month ago (balance sheet released on December 8), total assets dropped by $75 billion.
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... Compared to the balance sheet a month ago (released January 5), total assets dropped by $74 billion. ...
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