In it, he makes a strong case for not measuring inflation not in the rising of prices, but rather in the increasing of the money supply independent of precious metal reserves. The effect of this is that times where in an unmanipulated market would be causing prices to plummet due to technological advance, governmentally-driven increases in the money can lead to masked inflation, as he convincingly shows on page 92 (PDF 135) of the book.
This change of perspective shows that the 1920′s were indeed an inflationary period even though prices did not go up.
Anyhoo, this led me to wonder, what is the real inflation for the past decades when measured by the money supply? So here’s a bit ‘o data. Money supply is based on the M2 measure of money supply as measured by the federal government here.
January 1960 — 301.5 billion.
January 1970 – 592.0 billion. This means that throughout the 1960′s, there was an average inflation rate of 6.98% per annum.
January 1980 — 1486.2 billion. This means that throughout the 1970′s, there was an average inflation rate of 9.64% per annum.
January 1990 — 3176.2 billion. This means that throughout the 1980′s, there was an average inflation rate of 7.89% per annum.
January 2000 — 4671.3 billion. This means that throughout the 1990′s, there was an average inflation rate of 3.93% per annum.
January 2001 — 4975.0 billion. This means that during 2000, the inflation rate was 6.50%.
January 2002 — 5458.8 billion. This means that during 2001, the inflation rate was 9.72%.
January 2003 — 5803.7 billion. This means that during 2002, the inflation rate was 6.32%.
January 2004 — 6061.6 billion. This means that during 2003, the inflation rate was 4.44%.
January 2005 — 6401.3 billion. This means that during 2004, the inflation rate was 5.60%.
January 2006 — 6701.0 billion. This means that during 2005, the inflation rate was 4.68%.
January 2007 — 7099.6 billion. This means that during 2006, the inflation rate was 5.95%.
January 2008 — 7529.1 billion. This means that during 2007, the inflation rate was 6.05%.
January 2009 — 8296.9 billion. This means that during 2008, the inflation rate was 10.20%.
January 2010 — 8452.4 billion. This means that during 2009, the inflation rate was 1.87%.
Update: [January 2011 -- 8839.5 billion. This means that during 2010, the inflation rate was 4.6%]
So it looks clear that the U.S. government has been inflating the currency constantly, generally at five to ten percent per year. How much longer can the dollar get diluted until the markets realize that the U.S. government is set on a pattern of continually weakening the dollar, and the Crack-up Boom arrives?
rothbard, inflation, money supply, etc.
I’m currently reading Murray Rothbard’s America’s Great Depression.
In it, he makes a strong case for not measuring inflation not in the rising of prices, but rather in the increasing of the money supply independent of precious metal reserves. The effect of this is that times where in an unmanipulated market would be causing prices to plummet due to technological advance, governmentally-driven increases in the money can lead to masked inflation, as he convincingly shows on page 92 (PDF 135) of the book.
This change of perspective shows that the 1920′s were indeed an inflationary period even though prices did not go up.
Anyhoo, this led me to wonder, what is the real inflation for the past decades when measured by the money supply? So here’s a bit ‘o data. Money supply is based on the M2 measure of money supply as measured by the federal government here.
So it looks clear that the U.S. government has been inflating the currency constantly, generally at five to ten percent per year. How much longer can the dollar get diluted until the markets realize that the U.S. government is set on a pattern of continually weakening the dollar, and the Crack-up Boom arrives?
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