Bernanke versus Greenspan: 0-1

Publié le par Jean-Pierre Chevallier


Monetary aggregate M2-M1 increased by $49.7 billion during the week finishing on August 20.
M2-M1 only once increased as much: $51.1 billion after the September 11 (at September 19, 2001).
This very important increase means that Americans save much because they are afraid: they feel that their situation can worsen quickly in the near future.
In 2001, with Alan Greenspan, the Fed lowered its rates to 50 basic points three times: on September 17, on October 2 and on November 6… that avoided a recession.
Ben Bernanke does not want to adopt the same monetary policy as Alan Greenspan. He is wrongly. Greenspan was right.
The high rate of the Fed at 5.25%, higher than its neutrality at 4.25%, will cause a recession like it predicted Alan Greenspan… what confirms my previous analyses.

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The variations of M2-M1 have been strong increasingly for these last years, which shows that Americans react more quickly compared to the variations of the growth and the risks of reversal of the markets,


Figure 1: http://s3.archive-host.com/membres/up/2107676425/20070831US1M2M180.gif

 

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The variations of M2-M1 are strong increasingly especially since beginning 2007 because Americans feel that their situation can worsen quickly although they have high incomes and that unemployment is weak,
Figure 2: http://s3.archive-host.com/membres/up/2107676425/20070831US2M2M106.gif

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The increase in M2-M1 has just leaped during this week finishing on August 20

 

Figure 3: http://s3.archive-host.com/membres/up/2107676425/20070831US3M2M1.gif

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The variation of M2-M1 compared to the previous year is important : it has just leaped to 8,6%,


Figure 4: http://s3.archive-host.com/membres/up/2107676425/20070831US4M2M1.gif

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As the GDP growth is inversely proportional to the variation of the free money supply, zero growth currently occurs, even a recession,
Figure 5: http://s3.archive-host.com/membres/up/2107676425/20070831US5FRM.gif

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The strong growth in the second quarter compared to the precedent at 4.0% in annualized rate is misleading, because it is only 1.9% compared to the second quarter 2006.
The growth rate in the third quarter appointed here is 1.7% compared to the third quarter 2006 i.e. 0.1 or 0.2% compared to the previous quarter in annualized rate.

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