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Can Money Supply Tell Us How the Funny Money Rally Will End?

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EVERYTHING'S FUNNY WHEN YOU'RE MAKIN' MONEY
"The unprecedented contraction in money supply, as measured by 13 week percent change M2 non-seasonally adjusted money supply(yellow in chart), only intensified into early September 2008," Precision Capital Management writes in a guest post. "What this tells us is that the equities rally is running on vapors (likely in large part from the bank non-borrowed excess reserves portion of M0), with nothing to back it up (in the form of money circulating in the broader economy) once the vapors disappear."

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