Saturday , January 29 2022
Home / Tag Archives: FED

Tag Archives: FED

Money Supply Grew 13.1% in 2021 – Is It Enough to Keep the Bubble Going?

M2 increased by $201 billion in December.This represents a 0.94% MoM increase which annualizes to 11.9%. For the entire year of 2021, M2 grew by an incredible $2.5 trillion or 13.1%!This is extremely rapid money supply growth! The Fed can taper their asset purchases, but shrinking the Money Supply is the only way to rein in inflation.Despite this being extremely fast growth from a historical perspective, based on the most recent period, this recent deceleration could make it harder for...

Read More »

Is Omicron Hiding Much Higher Inflation?

The CPI for December was 0.5% month over month, with a non-seasonally adjusted annual rate of 7.0%.As the chart below shows, the December data reinforced a downward trend we’ve seen since a .95% reading in October. But is the recent omicron COVID spike hiding much higher inflation?Unfortunately, the current downward trajectory can be attributed to items associated with a slow-down in Economic activity from Omicron. Energy and Transportation both saw modest declines. Specifically, Energy...

Read More »

Tax Revenues Surge 20% Compared to 2020 and 2019 – Will it Last?

The Federal Budget Deficit in November was $191B which is 40.5% of total expenditures for the month. Last November’s deficit was $145B. In the trailing twelve months, the deficit was $2.7T which represented 39.4% of total expenditures. The TTM deficit is down 16% vs the $3.2T value as of Nov 2020, but up 164% vs the $1.02T from Nov 2019.Interestingly, TTM Revenues are up 20% compared to 2019 and 2020. This has been driven by a massive increase in both Individual and Corporate taxes (more...

Read More »

Expectations Are Finally High Enough for Sky High Inflation

The latest seasonally adjusted inflation rate for November was .76% month over month, with a non-seasonally adjusted annual rate of 6.81%.These numbers were generally in line with mainstream expectations that have finally gotten high enough to match the blistering hot inflation numbers coming out month after month.Remember in June when the Fed expected 2021 inflation to come in below 4%? December has not officially printed yet, but it’s safe to say the Fed was wrong.The Fed also said...

Read More »

Yes, monetary policy did cause the Great Depression

During the 1930s, almost no one believed that the Fed caused the Great Depression. After a pathbreaking study of Milton Friedman and Anna Schwartz, published in 1963, the economics profession gradually changed its view. By 2002, even a top Fed official like Ben Bernanke conceded to Friedman: Let me end my talk by abusing slightly my status as an official representative of the Federal Reserve. I would like to say to Milton and Anna: Regarding the Great...

Read More »

US Debt: The Landscape Has Changed and the Fed Can Do Nothing About it

Similar to August and September, the total national debt has not increased due to the current debt ceiling that’s in place. Similar to August, the Treasury has raided public retirement accounts to continue funding government spending (light green bar below).Looking at the bigger picture, Covid has forever shifted the landscape of US Debt.The chart below also highlights a trend that has been in place all year: the Treasury is rapidly converting short-term Bills to medium-term Notes (shown...

Read More »

What Taper? Fed Adds $126 Billion to Balance Sheet in November

The Fed added $82 billion in Mortgage-Backed Securities (MBS) and $65 billion in Treasuries to its balance sheet while allowing $22 billion in repo agreements to roll off the balance sheet. The net gain was $126 billion in the month that the “taper” was set to begin.The Fed autopilot buying targets about $120B in monthly purchases split by $40B in MBS and $80B in US Treasuries. The stated objective is to decrease purchases by $10B per month in Treasuries and $5B per month in MBS. This...

Read More »

Will Gold Blast Through $1900 on a Brainard Nomination This Weekend?

Gold finally broke through the $1,800 resistance after yet another sizzling hot CPI read. Could $1,900 be next?The analysis last month and the month before showed that a breakout in the price of gold looked to be very close.It happened!Gold took out $1800 and then sliced through $1835 without much effort. After a big move, gold will typically rest and consolidate before moving on. This week, gold has looked more like a prisoner trapped in a box than a weary traveler looking to...

Read More »

Budget Deficit Represents Greater than 35% of Total Expenditures

The Federal Budget Deficit in October was $165B which is 36.8% of total expenditures for the month. This is slightly below the twelve-month average where the deficit represented 39.3% of total expenditures. Over the twelve-month period, the Total Deficit was $2.65T due to total Expenditures that reached $6.7T.The two Sankey diagrams below show the monthly and twelve-month picture to depict the size of each revenue and expenditure source.Labor and SBA are significantly larger in the...

Read More »

Analysis: CPI Blasts Past Expectations; Price Increases Widespread

The October CPI data came in even hotter than expected, and we saw widespread price increases across multiple categories.The following provides an in-depth analysis of the most recent CPI data.The latest seasonally adjusted inflation rate was 0.95% month over month (vs. 0.6% expected), with a non-seasonally adjusted annual rate of 6.2% (vs 5.6% expected). The reason for the sharp increase can be seen across the board.The unrounded number is calculated by using the actual BLS weights and...

Read More »