Monetary Base Grows 38.9% in November 2013
Changes in the monetary base, or money supply, have a significant impact on capital equipment sales. In November 2013, the monetary base was $3.705 trillion dollars. That is 38.9% more than it was in November 2012. This is the fastest rate of month-over-month change in the money supply since October 2009. The annual rate of change has been growing faster and faster since February 2013. Because the month-over-month rate of growth is still accelerating, the annual rate of change will continue to accelerate well into 2014. This is a strong indication that machine tool sales will grow in 2014, particularly in the second half of the year.
There is much talk in the media about the Fed tapering its bond purchases after their December or January meeting. Doing so would mean that the growth in the monetary base would slow down. However, I doubt this will happen in December as it Bernanke's last month as Fed chairman. I doubt the Fed will change course on his way out. Also, the Fed has been talking about this for some time. I won't believe their words until they actually do it and stick with it for a number of months.
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