Federal Reserve Charts: Monitor These Charts Weekly if You Want to Get an Early Warning of Problems Ahead.

Here are the Federal Reserve charts that I regard as highly useful for predicting the next phase of the business cycle. To view any chart, click on its title. (You must have Adobe's Acrobat Reader installed.)

In my department on Federal Reserve Policy, I comment on these charts, plus other materials issued by the Federal Reserve System and by FED-watchers. This department is in FOR MEMBERS ONLY.

To understand the Federal Reserve System, begin with this video:

The much-publicized rate, the Federal Funds rate, is in fact a publicly stated target rate. The real Federal Funds rate is the rate at which banks lend to each other overnight. The free market sets this rate, and it is rarely quoted or even mentioned. What gets quoted is the Federal Open Market Committee's target rate. You can trace its recent history here:

To see the recent actual daily FedFunds rates, see this page:

To achieve this rate, the Federal Open Market Committee, on behalf of the Federal Reserve System, buys or sells securities. It uses about 20 large firms to execute these trades. The list is here:

I wish the following were in chart form. It is a table. The Federal Reserve publishes this weekly. Pay attention to this statistic: Deposits with F.R. Banks, other than reserve balances. This is the money that commercial banks deposit with the Federal Reserve instead of lending. This money is sterilized. It does not get lent, so it does not become part of the fractional reserve process. It reduces the money multiplier. It offsets increases in the monetary base. It rose in late 2008 by a staggering half a trillion dollars.

To see a chart of Median Consumer Price Index and the regular CPI, click here:

For definitions of the monetary aggregates, click here:

I begin with the Adjusted Monetary Base.

Adjusted Monetary Base: Short-term

Adjusted Monetary Base: Long-term

Federal Reserve Credit

Federal Reserve Balance Sheet.

Excess Reserves of Commercial Banks

Of the more widely reported monetary statistics in the financial press, M1 provides by far the best indication of future prices. Here is a chart of its growth, 1975-present.

M1

Offsetting M1 (usually) is the M1 money multiplier.

MZM (Money of Zero Maturity): Short-term

M2: Short-term

MZM, M1, M2, M3 (to mid-2006): Long-term

Money Velocity: Long-term

Bank Credit

U.S. Interest Rates

Real Interest Rates

U.S. Government Debt

U.S. Trade Deficit

Gross Savings & Balance on Current Account (Balance of Payments)

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