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By Matt Busigin, Macrofugue

Much has been said about the Federal Reserve’s balance sheet expansion, “money printing,” and commodity inflation.

The simple fact remains, however, that all of these billions of dollars haven’t even been able to replace the money destroyed by debt deflation.

Even inflation-hawk John Williams’s reconstruction of this series shows that the peak growth in the discontinued wide-money growth occured in early 2008, and is still contracting y/y.

(Courtesy of ShadowStats.com)

Despite higher prices, there is less money in the system.  The money in the system (created by Federal Reserve balance sheet expansion) that replaces debt deflation is also far less economically active, as evidenced by velocity and multiplier measurements.

Evidence continues to mount: the inflationistas badly need to revisit their religious views on monetary policy theory.

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