Tuesday, January 19, 2016

Adjusted Monetary Base dropped off the cliff

I don't think anyone would want to step in the midst of this. I think any strength that you get in the stock market is probably going to be very short lived.

One of the things I take a look at more than anything is the decline that's taking place in the Adjusted Monetary Base. The base has fallen off the cliff. That's the real money supply. That's the stock from which other soups of monetary aggregates are derived and it has plummeted. Now that's just the Fed perhaps rolling off securities, but nonetheless it is falling. And if the economy is demanding more money, it has to come from someplace, it  has to come out of equities.