Monetary Base Contracts for 12th Month

(Negative) In February 2017, the monetary base was $3.764 trillion. While the monetary base has crept up the last two months, compared with one year ago the monetary base decreased 3.3 percent. This was the 12th time in 14 months and 17th time in the last 20 months that it has contracted. But, the rate of contraction has decelerated for four months in a row. As a result, the annual rate of change in the monetary base, now -5.6 percent, contracted at an accelerating rate for the 11th month in a row. The last time the annual rate of change contracted faster was May 1938. This was during the second leg down of the Great Depression. So, perhaps this is an indication that we are entering the second, and hopefully final, leg down in the Great Recession. It is likely that this will cause some surprising shifts in economic data.