Monetary Contracts 11th Month in a Row

(Negative) In January 2017, the monetary base was $3.610 trillion, which was slightly higher than last month but still near the lowest level in four years. Compared with one year ago, the monetary base decreased 4.9 percent, which was the third month in a row of decelerating contraction. However, this was the 12th time in 14 months and 17th time in the last 20 months that the monetary base contracted. As a result, the annual rate of change in the monetary base, now -5.3 percent, contracted for the 11th month in a row. The last time the annual rate of change contracted anywhere near this fast 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.