Miss This One? US Money Supply for May

Time to pay attention 

AAS Economics 

 

 

The Good Ol’ Daze

Remember those good old days when market mavens used to wait for the release of the Fed’s money supply statistics?

We do.

For quite a few years people realised that the money supply growth rate mattered - very much.

Then the waters got muddied, with definitional changes due to “financial innovation” and even the removal of some data series altogether and the declaration that some stuff just “didn’t matter any more”.

We can’t have people seeing what’s really going on now, can we?

Still Crazy After All These Years

But the money supply - and especially it’s growth rate - still matters. It matters a lot.

We show this day after day in our forecasting and our asset allocation and market modelling.

The rate of money supply growth is really the rate of debasement of your currency - the rate at which you are losing purchasing power.

And when you look back at some of the growth numbers they’ve been pretty crazy.

But they still are…

May’s US Money Supply Growth Rate at 16.6% p.a.

The Fed’s May, 2026 money supply data - which we dissect and recompile to generate a proper historical series based on first principles - showed an annual growth rate of 16.6% p.a.

Yes, your money is being debased at the rate of 16.6% per year as at the end of May.

How good is that?

If we strip out the monetary bonanza that was COVID we are back very close to cyclical peaks, the highest in the above chart being 17.2% p.a. in January of that banner year, 1987.

Can’t quite remember but didn’t something happen that year after the money supply growth rate turned down?

Another fun peak was in 1991. Didn’t the property market have a great time around then?

But wait, there’s more…

Yet another spike appeared in 2000. Did someone mention “dot.com”?

Coincidence fanciers will also thrill at the peak in June, 2008. Wasn’t that a doozy!

So, we’re back there again.

We can hardly wait…