Other Deposit Liabilities vs M2, monthly average via St. Louis Fed

ODL vs M2 Chart Notes

• Other Deposit Liabilities (ODL see description below), is a monthly average.
• M2 is a monthly measure through March.

A Better Definition of Money

The main difference between ODL and M2 is that ODL does not include currency or retail money market funds.

Currency is accepted at an increasingly fewer number of business establishments and simply cannot be used for very large sized transactions. Retail money market funds never became an important medium of exchange. Both are becoming a far less used medium of exchange.

ODL has the additional advantage that it is the main source of funding for bank loans and investments, making ODL both a monetary and credit aggregate. Friedman would not be surprised that the need to change the best definition of what constitutes money would change over the years. 

The above three paragraphs from Lacy Hunt at Hoisington Management.

ODL Other Deposit Liabilities vs M2 Percent Change

H.8 Annualized Liabilities Percent Change 

(Click on image to enlarge)

Table above from the Federal Reserve H.8 Report.

My chart differs slightly because St. Louis Fed monthly averages do not precisely match the way the Fed averages the H.8 report.

All Ears, It's Deflation

ALL EARS ON THIS ONE. https://t.co/dq5R06IMX8

— Danielle DiMartino Booth (@DiMartinoBooth) April 25, 2023

Money Supply vs CPI

The history for those wondering. Note CPI. https://t.co/oN8DscD4Hx pic.twitter.com/ckr3cbD1PU

— Danielle DiMartino Booth (@DiMartinoBooth) April 25, 2023

Where are the Inflationistas on Money Supply?

The amusing thing about these inflation-deflation discussions is that for years, decades actually, the inflationistas pointed to money supply as their measure of inflation. 

Now they point to the CPI because that's all that remains.

Purposeful Recession

Meanwhile please note, the Fed is purposely marching the US into a recession.

For discussion, Fed Minutes Now Predict a Recession This Year Along With Higher Unemployment

This is more of an admission than a forecast. The Fed is on a mission to slow the economy, and it will. But the Fed cannot say it the way I just did.

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