Friday, May 13, 2011

60 Times (3)

MZM is a new measure of spending money. New to me, anyway: I'm not comfortable yet with what it is. But I can add it to the graph to my graph of debt relative to various measures of money:

The green line is much, much lower than either of the other two measures, because MZM is a much, much bigger number. Note that the Bernanke spike has no apparent effect on DPD based on MZM.

Now I eliminate debt-per-base-money (the blue line) and debt-per-M1 (the red line) to get a better look at debt-per-MZM:

Two ways to look at this one:
1. Rapid increase until about 1990, and then just flat.
2. Rapid increase until about 1981, and then very gradual increase.

I go with option two, for two reasons. First, finding the kink at 1981 agrees with the obvious kink locations in my three FRED graphs of 29 April. Finding the kink at 1981 also agrees with the timing of the Keynes-Reagan shift.

Second, the rapid-increase phase is a series of rapid upward movements punctuated by temporary pauses or flat spots in the uptrend. The gradual-increase phase, by contrast, is a series of humps. And the period running from 1977 to 1983 is a hump.

I would be willing to say that 1977-1987 is a transition period, showing both a hump and rapid-increase. (The hump itself ends at a much higher level than it begins. And it ends with a rapid-increase.)

What does this mean? I don't know, yet. For sure, though, the Bernanke spike had no noticeable effect on this trend-line.


LiminalHack said...

Have you made a mistake here? Because MZM is defnied as:

""A measure of the liquid money supply within an economy. MZM represents all money in M2 less the time deposits, plus all money market funds.


How can MZM be less than M1?

That aside, it makes sense that MZM is at a lesser fraction of NGDP if money-of-longer-maturity (MLM) has a velocity greatly exceeding M0, M1 and MZM.

BTW, there is still something seriously wrong with blogger because some of the prior comments belonging to our last discussion are missing.

I do wonder why people put up with blogger...

The Arthurian said...

Ahh, the denominator problem. MZM is substantially bigger than M1, but "Total Credit Market Debt Owed" divided by MZM is much lower than TCMDO divided by M1 or Base.

But I see that my opening line is confusing. In my mind I was just following up on the "60 Times" and "60 Times (2)" posts... I wrote them all at once but posted them over a few days. And my opening does sound like I'm showing 'MZM' rather than 'Debt divided by MZM'. My bad.

Yeah, I see two or three messages are missing. I received them as email, and I will reconstruct them.

This was the worst Blogger glitch in my experience. Two days.

Speaking of not-blogger, I finally found your "Liminal Hack" blog. Impressive. Looks like some of the older posts are no longer open for comments; and I've not read enough of the newer ones yet to comment.

What I've been looking at in my recent posts is various measures of money, and total debt relative to them. And the effect of the big spike in base-money on the various debt-to-money ratios. The effect is much smaller for M1 than base, and the effect is non-existent for MZM.

But my conclusions don't always arise before I'm finished writing my posts.

God it's good to have the Blogger back!

LiminalHack said...

" And my opening does sound like I'm showing 'MZM' rather than 'Debt divided by MZM'."

Ah, understood.