By: Ricardo

yeah, i noted the same thing. The $ drop in broad money is smaller than the $ drop in M3, which suggests the drop all came in M3 classes — which points to term deposit liquidation. perhaps folks are switching out of TDs and into housing? that’d explain the move.

as for if money leads or lags, many people claim that real money balances lead, but money can be both a cause and an effect so it’s not straight-forward.

rule of thumbs say it leads. I say it’s mostly a residual that’s determined by other (more meaningful) settings, such as the level of rates.