In March 2021, the monetary base was $5.839 trillion, which was the highest level ever and 7% higher than the previous all-time high in February 2021. Compared with one year ago, March’s monetary base was up 50.4%, which was the seventh month in a row and ninth in the last 11 months with faster than 50% growth. This was the 12^th consecutive month that the month-over-month rate of change was faster than 44%. And March was the 16^th month in a row of month-over-month growth. 

Much of the coronavirus stimulus from the government is still in place. Further, as of this writing, President Biden will announce his third $1 trillion stimulus plan since he took office at the beginning of the year.

The annual rate of growth accelerated to 51.6% in March, which was the 12^th straight month of accelerating growth and the fastest rate of growth since March 2010. Based on the monthly and quarterly trends in the money supply, the annual rate of change is approaching its peak rate of growth.

Historically, the annual rate of change in the monetary base leads capital equipment consumption, specifically machine tool orders, by 12-18 months. Although, the lead time between the monetary base and capital equipment consumption shrunk over the last decade. The recent rapidly accelerating growth in the monetary base should eventually lead to accelerating growth in machine tool orders and capital equipment in general. It is likely that machine tool orders bottomed in August. The chart below shows the possible annual rate of change in machine tool orders (dashed blue line).