Monthly Change in Monetary Base Contracting Faster

The accelerating contraction in the month-over-month rate of change has caused the annual rate of change to grow slower for three straight months.

In June, the monetary base fell to $3.672 trillion, its lowest level since January 2017. Compared with one year ago, the monetary base contracted 3.2 percent, June being the fourth month of accelerating contraction in a row and having the fastest rate of contraction since February 2017. As a result, the annual rate of change grew at a slower rate for the third straight month.

Typically, there is a long lead time of 18 to 24 months between changes in the money supply and changes in capital equipment consumption. However, since the Great Recession in 2008/09, that lead time has shortened due to the dramatic effects of the massive amount of money the Federal Reserve created to pump up the economy. 


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