M2 Money Growth Lowest Since 2005
Many economists and analysts are getting more and more concerned now about inflation, including Larry Kudlow, Brian Wesbury and Bob Stein, here's the latest from Brian and Bob:
The Federal Reserve is twiddling its thumbs waiting for consistent signs of falling unemployment before it starts raising interest rates. The Fed’s theory is that inflation won’t show up until the labor market gets a lot stronger than it is today. But inflation isn’t just arriving early, it’s bashing down the door. With the economy recovering faster than the Federal Reserve anticipated, the easy money policy it continues to hold onto is a dangerous problem. With each passing month the Fed is getting further and further behind the curve.
MP: And yet the money supply figures, at least M2 growth, don't necessarily indicate any inflationary pressures. The chart above displays year-to-year M2 growth (data here) back to January of 2005, and shows that M2 growth has been falling since the first of the year when it peaked above 10%, and now the most recent growth rate of 4.5% through the end of November is the lowest annual growth in M2 since December of 2005. What gives? Wouldn't M2 money growth have to be much higher to fuel the kind of inflation many are worried about?