M1 consists of: (1) currency outside the U.S. Treasury, Federal reserve Banks, and the vaults of depository institutions; (2) traveler’s checks of nonbank issuers; (3) demand deposits; and (4) other checkable deposits (OCDs), which consist primarily of negotiable order of withdrawal (NOW) accounts at depository institutions and credit union share draft accounts.
M1 vs. Real GDP/10 2000-Present
M1 vs. Annualized Change in Real GDP
The third chart shows annualized change in GDP vs. M1.
Increases in M1 no longer have the same effect on growth or jobs.
M1 as Percentage of GDP
M1 money supply has increased under Bernanke at a faster pace than ever before relative to GDP.
I will take a look at GDP vs. other money supply measures later this week.
Mike “Mish” Shedlock