I've noticed a change for the better in the economic situation starting about May 1. I'm using a new metric, which I call "total monetary supply", which is M2 + the National Debt, less Treasury securities owned by the Fed. I think that US Treasury bonds are really a form of money and should be treated as such. I'm concerned about monetary inflation and what QE3 will do. As I've stated before, I don't think the Fed buying up Treasury bonds is inflationary, but buying up Mortgage-Backed-Securities (MBS) is.
So everything before May 1 that we can write off to recovery from the great recession. But I do want to keep track of what happens after that date. To be consistent, this measurement should be done only once per month, using the last date in that month.
Here are the numbers from April 30, 2012:
M2 (2012-04-30) 9883.1
Nat. Debt (4/30/2012) 15692.4 [10916.0]
Less: Nat. Debt owned by Fed ( 4/26/2012) 1667.0
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Total Monetary Supply as of 4/30/2012: 23908.5 [19132.1]
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I don't necessarily want to calculate this each month, but it makes sense on a quarterly basis, so I can say, total monetary supply went up x% in the quarter. So lets jump back to March 30, 2012 as a baseline.
M2 (2012-03-26) 9827.1
Nat. Debt (3/31/2012) 15582.1 [10846.8]
Less: Nat. Debt owned by Fed (3/29/2012) 1667.9
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Total Monetary Supply as of 3/31/2012: 23741.3 [19006.0]
Watch this space. I fear that inflation will come roaring back, and it will take on a life of its own. I think up to 2% increase per quarter is probably fine, but any more is a cause for concern.
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Update: I'm now thinking that this should not include intragovernmental liabilities such as Social Security. While this is a very real debt, it is owned by the Social Security Trust Fund and not by individuals. Since it can't be traded on the open market, it isn't equivalent to money. I have revised the above numbers to include the amount without intragovernmental liabilities in brackets.
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