Barron’s notes that the M1 money multiplier biweekly indicator is worth watching closely.
Why? Because the multiplier is declining “corresponds so exactly to the expansion of the Fed’s balance sheet It hits at the core of the problem in a credit crisis. Until [the multiplier] expands, we can’t get sustainable growth of credit, jobs, consumption, housing. When the multiplier starts to go back up toward 1.8, then we know the psychological logjam has begun to break.” (Constance Hunter, economist at hedge-fund firm Galtere).
The M1 Money Multiplier (biweekly)
Source: St. Louis Federal Reserve
Leslie P. Norton
Barrons MARCH 15, 2010