David Lentz

Five Ways To Ride Gold to $1500

re: money supply growth?

Yes, M1 is still relatively stable, but if you look at M3 (which the Fed stopped reporting some years ago but can be reconstructed with some transparency -- see nowandfutures.com/key_...), you find that it is now approaching 20% per year and accelerating!

Myself, I wonder about how relevant this surge in M3 is, given the implosion of asset values in much of what makes up M3. But it's gotta make one pause and think a bit.

Do monetary aggregates (either from the Fed or other sources) take into account the assets that have gone up in smoke?

In any event, as we plunge headlong into recession and productivity falters (increasing unemployment tends to make the economic machinery run less efficiently), the production of goods & services is bound to run over a cliff, and at the same time that the Fed is shoveling billions into the economic furnaces to try and keep the fires from going out. Inflation seems a reasonable expectation.