Australia’s growth in M3 money supply is just as scary: Degradation of Australia’s fiat paper money

“Inflation only makes imports more expensive.”
-Money Quote

Of course, he IS correct in his worldview… I’m going outside now to watch for the helicopter.

So if everyone’s income has stayed roughly the same for the past 10 years (80-90% of Americans), but the money supply (zero maturity or “cash”) has doubled, where did the new money go?

Not to mention all this new money probably entered the economy in the form of shady mortgage loans. It seems like a few people made a lot of money…

So if everyone’s income has stayed roughly the same for the past 10 years (80-90% of Americans), but the money supply (zero maturity or “cash”) has doubled, where did the new money go?

The stock and housing markets, mostly.

Can you imagine what would happen if one billion Chinese would actually know what their government and central bank is doing to them?

Let me take a wild guess–the Chinese government might have to revive the strategy of killing them by the tens of millions to maintain control?

Bernanke explained it away as people selling riskier assets and putting the money in the bank. But people are worried about the U.S.banks, (at least, that is what their stock performance is telling us), so that would be the last place they’d put any assets over 100K.

I’ve been stockpiling cash in short-term savings online waiting for stocks to decline. I’m not in the market for a house, but if I was I’d be doing the same thing, waiting for prices to drop. If on the other side of the ledger, fewer loans are being written, Bernanke’s explanation is not so crazy.

M2 is a better measure.

And about as likely to happen as Al Gore debating his position.

If you parse Bernanke’s words, he doesn’t disagree with Paul. He says the Congressional mandate is low inflation AND full employment. Change the mandate and Bernanke will change policy.

Bernanke explained it away as people selling riskier assets and putting the money in the bank.

So the idea is that people have been doing this at an accelerating rate since 1995?

Chinese liberty is a threat to the US? How does it harm me if the Chinese are free?

I’d rather them be free. They make great products.

Jeffrey: Here’s a friendly suggestion about properly distinguishing between money and near-non-money. MZM and M2 each contain large components, such as money market mutual funds, that are not money. MMMFs are not money because A) they are investments for which one gives up one’s bank depository money in exchange; and B) to count them as money, one necessarily falls into “double counting”, of the MMMF balance and of the demand deposits exchanged for the MMMF investment.

This sounds preachy, but read Frank Shostak’s articles that make sound distinctions between “credit transactions” and deposit transactions.

I watch two measures of money. First, I watch the Monetary base, because its the only measure of M the Fed directly controls. (this courtesy of Gary North, who really accomplished at money watching)
Secondly, I watch Shostak’s Austrian Money Supply (whenever the good Dr. Shostak chooses to publish updates to his statistical series.) In lieu of the AMS, I watch narrow money–M1, though this is distorted downward, apparently, by institutional changes.

Anyway, a realistic counting of money creation over the past couple years explains why stock and real estate prices are crumbling: money has been moderately tight for nearly two years (the base growing at roughly 2%) and decelerating since the start of 2004. Go to the St. Louis Fed website and peruse their charts.

Of course, at some point the Fed will be “forced” to inflate with abandon. For now, however, rising inflation is not an imminent threat in the US.