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- Jul 7, 2015
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For the past few years I have been concerned about inflation of the dollar. I suspected the money supply was increasing significantly, especially with Fed actions like quantitative easing. I wanted to know how much the money supply was changing, but I did not trust the official CPI numbers.
At some point, I realized the CPI does not actually measure the money supply. Because of this, it does not provide a measurement of the inflation rate of the dollar. It only provides a measurement of price inflation. To get to the real inflation rate of the dollar, the money supply needed to be measured directly.
I tried to find sources of money supply data. The M1, M2, M3....measures of money were all I could find. These helped to show what the Fed was doing to the money supply, but it lacked a huge component: fractional reserve money expansion that occurs from fractional reserve banking. Again discouraged.
Yesterday I just finished reading an intriguing book called Debt Inflation that an investing friend asked me to read so we could talk about it. In it a way to calculate the money supply, INCLUDING fractional reserve money expansion, is described. I've got to say it is pretty interesting. There is a website that goes with the book (Monetary inflation rate calculator that does not rely on CPI data and it has calculators on it. Supposedly the average inflation rate of the dollar over the years has been about 7%.
Anyone have thoughts on this? Anyone come across this idea yet?
At some point, I realized the CPI does not actually measure the money supply. Because of this, it does not provide a measurement of the inflation rate of the dollar. It only provides a measurement of price inflation. To get to the real inflation rate of the dollar, the money supply needed to be measured directly.
I tried to find sources of money supply data. The M1, M2, M3....measures of money were all I could find. These helped to show what the Fed was doing to the money supply, but it lacked a huge component: fractional reserve money expansion that occurs from fractional reserve banking. Again discouraged.
Yesterday I just finished reading an intriguing book called Debt Inflation that an investing friend asked me to read so we could talk about it. In it a way to calculate the money supply, INCLUDING fractional reserve money expansion, is described. I've got to say it is pretty interesting. There is a website that goes with the book (Monetary inflation rate calculator that does not rely on CPI data and it has calculators on it. Supposedly the average inflation rate of the dollar over the years has been about 7%.
Anyone have thoughts on this? Anyone come across this idea yet?