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by Mish


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

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M1 vs. Annualized Change in Real GDP

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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

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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