How bad is the inflation getting? Checkout this chart.

[socialize_me]

http://research.stlouisfed.org/publications/usfd/page3.pdf

Basically the adjusted monetary base has nearly doubled in less than three months. Seems to be leveling off, but of course if that chart were to suddenly plummet, the cold winter depression would be here by Friday. Look for higher prices in 2009 :D

[DFF]

if that chart were to suddenly plummet, the cold winter depression would be here by Friday

You're alluding to a "what if" scenario were the Fed to suddenly contract the money supply?

[socialize_me]

You're alluding to a "what if" scenario were the Fed to suddenly contract the money supply?

Yeah, I was addressing the point that people would believe that chart could easily reverse. It can't. The only way is up from here (or stay level), and either way, higher prices are on the way regardless of all the "deflation" talk.

I have a hard time believing that with the Federal Reserve nearly doubling the money in circulation, prices will stay the same or be cancelled out by the alleged deflation we have going on.

[Jordan]

Its getting real bad but no one outside the US is panicking yet. We all like to talk about the day that the inflationary bubble bursts and all of our creditors want their money back instantly. When that time comes, it will be huge, but we have to consider that it might be another 20 years before it does.

In any event, plan for that 20 year occasion and be as liquid as you can. You'll be able to drain every last dollar out of the stock and metals markets.

[Ex Post Facto]

The only real way out of this mess for the banker is to inflate. This just goes to show that they would make the country bankrupt and reap the rewards of all the hard working Americans. They should all be tried for Treason.

[Elwar]

Wow, we're rich!!!

[TruthisTreason]

Banks are holding.

http://2.bp.blogspot.com/_nSTO-vZpSgc/ST7ujh4TtcI/AAAAAAAAD9M/uudLWS6Ss6k/s1600-h/M1-Mult.png

[thechitowncubs]

Banks are holding.

http://2.bp.blogspot.com/_nSTO-vZpSgc/ST7ujh4TtcI/AAAAAAAAD9M/uudLWS6Ss6k/s1600-h/M1-Mult.png

Not lending? Is that what this chart infers?

[Mordan]

In any event, plan for that 20 year occasion and be as liquid as you can. You'll be able to drain every last dollar out of the stock and metals markets.

be liquid? what do you mean? when inflation comes in... don't you want to go out of paper money (most liquid)?

[socialize_me]

Not lending? Is that what this chart infers?

Yes, the M1 multiplier means if the depositors deposit $1, how much extra money is produced in the economy. It's inflation via the fractional reserve system. If the money multiplier on that chart is 2, that means for every $1 deposited, it's doubled. The reserve requirement is currently at 10%, meaning $1 can turn into $10 in the economy at the most. Of course that never occurs and usually money is only multiplied 2-4 times. Since it's at 1, really no inflation is occurring via the fractional reserve system meaning absolutely no money is being lent out and then redeposited in another bank somewhere along the line.

[inibo]

I want to do a blog post on this showing people what inflation looks like. Can someone please explain the table at the bottom so I sound like I know what I'm talking about?

In case anyone wants it here it is a .png
http://farm4.static.flickr.com/3206/3101448358_c8730fd520_o.png

[socialize_me]

I want to do a blog post on this showing people what inflation looks like. Can someone please explain the table at the bottom so I sound like I know what I'm talking about?

In case anyone wants it here it is a .png
http://farm4.static.flickr.com/3206/3101448358_c8730fd520_o.png

The Adjusted Monetary Base represents the most liquid form of cash. In other words, currency in the hands of the public + commercial bank deposits at the Federal Reserve. It excludes investments like CD's, money in treasuries, etc.

M3 is probably off the charts, but since we haven't had an official M3 measure since 2006, it's difficult to know exactly where the total money supply stands at. That chart represents a very small portion of the money supply, but is very alarming because it has the biggest influence on consumer prices. If you double the adjusted monetary base, you've essentially directly cut the purchasing power in half as there's twice as much physical currency than before. Often times the Adjusted Monetary Base is not increased yet the money supply still grows. This happens through credit expansion from the Federal Reserve concerning M3, the ultimate aggregate sum of money and its equivalents, in the world.

Many times M3 can increase drastically but the adjusted monetary base stays relatively flat. The components of M3 are M2 + large time deposits, institutional money-market funds, short-term repurchase agreements, along with other larger liquid assets. What you are looking at with the Adjusted Monetary Base is essentially M0. A lot of M3's components are just credit and the physical form of money itself isn't present. With the adjusted monetary base, you basically have the measure of all the physical currency which is about a tenth of M3, perhaps even more. So most of the money in the money supply doesn't actually exist in its physical form. Just numbers in a computer or on a balance sheet.

[inibo]

The Adjusted Monetary Base represents the most liquid form of cash. In other words...

No offense, but I understand the chart at the top. I'm trying to get an explanation the table at the bottom

Adjusted Monetary Base
To the average of Compounded annual rates of change, average of two maintenance periods ending:
two maintenance
12/05/07 02/27/08 05/07/08 06/04/08 07/02/08 07/30/08 09/10/08 10/08/08
periods ending:
0.0
05/07/08
1.3
06/04/08 2.2
1.5 5.9
07/02/08 2.4
3.2 4.8 9.2 9.5
07/30/08
2.9 4.0 6.5 5.9 7.0
09/10/08
17.8 25.1 38.7 46.5 61.9 84.8
10/08/08
47.3 67.4 104.4 129.2 173.7 249.5 785.5
11/05/08
75.2 107.1 164.2 202.9 268.5 376.1 932.7 1453.9
12/03/08


Specifically what is "the average of two maintenance periods" and "Compounded annual rates of change, average of two maintenance periods"? I think I could make sense of the second if I knew what "maintenance periods" were. Unless you explained it and I missed it, in which case I'm lost.

[inibo]

Bumping for an answer.