I know, I know, M2 isn’t exactly the right indicator

Still, I find this interesting:

M2 money supply growth rates are plunging in Greece (down -16.8% y/y through February), Spain (down -4.7%), and Portugal (-3.8% through January). It is up only 1.3% through February in Italy.

Germany’s M2 is up 7.5% y/y through February. Some of that growth is coming from Greece, Portugal, and Spain, where money supplies are falling as depositors move their funds to banks they deem to be safer in Germany.
The article is here.  Most notable is how the various rates of money supply growth start to diverge around 2010.  For the pointer I thank Alexander Schibuola.


How much of that is divergent real output versus diverging money per real output...?

Yeah, this is going to bog down in "but that's not M!" as well, given that the financial system M2--->M mechanism is being screwy too.

Actually, channelling Goodhart, I would say that even if the causation doesn't run from M2 to the economy, the M2 is still a fairly robust 'indicator'.

In a related note, Greek banks have had over €5 billion withdrawn since the 6th of May: http://www.ft.com/cms/s/0/5aa74018-9e88-11e1-a24e-00144feabdc0.html

FT Alphaville points out that this is over €700 million per day (not yet a run, but at least a fast walk and arguably a jog): http://ftalphaville.ft.com/blog/2012/05/16/998501/plug-pulling-in-athens/

I wonder how much is moving to dollars.

M3 is similar:


Greece can't print its own money. But isn't that a good thing? How else can the dirt in Greece be cleaned up? Imagine if they could print their own money. The dirt would have otherwise solidified. We don't say GM or Ford should be able to print money because it would lead to crappy and dangerous cars, since they would have little to no incentive to innovate and improve, by way of buying their own debt whenever market forces would have bankrupted them. Same thing with Greece (and every other country for that matter). If the US couldn't print its own money, an even bigger pile of dirt would be loosened up here.

It would be interesting to see aggregates in Euros not percentages. I would have thought that 7.5% increase in German M2 could be as much as the whole decrease in Greek and Spanish M2, for example.

How has Swiss M2 tracked?

And the animal spirits continue to worsen the situation.

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