Money Supply Data Reveals “New Major Dip” Ahead

Trillions of dollars have been spent on US stimulus, and like all activities — the good, the bad, and the extremely dubious — it must eventually, necessarily come to an end. This is true if for no other reason than it’s simply too expensive to support. Heck, even the Brits have ended their version of quantitative easing… and so now Bernanke is reviewing US options for doing the same.

An article in Barron’s today suggests the stimulus has been a good thing, and points to the fact that “the money stock is shrinking in real terms” to defend why it should persist. To support the case, John Williams of ShadowStats is cited:

“As John Williams, the proprietor of Shadow Stats, explains, the drop in real M3 is a sign of the double-dip ahead. ‘In modern economic history, every time there has been such a year-to-year liquidity contraction, the economy subsequently has turned down, or if already in recession, the economic downturn has intensified,’ he writes in a report to clients. (more)