Money Supply Explosion Madness

M2 nsa three month annualized money supply growth has ticked up another notch, this past week, and is now growing at an incredible 19.3%. This is extremely high money growth, that is somehow being usurped by M1 growth. M1 nsa three month annualized money supply growth is at an astounding 73.2%, which means Fed Chairman Ben Bernanke is doing all he can to ease fears and get the economy going, by a policy of reckless abandoned. That most continue to put their money in the M1 components of currency and checking accounts is an example of the lack of understandng by the man on the street.

At some point this attitude of placing money in M1 will reverse itself and the economy will climb (at least as far as tracked data is concerned)and prices will soar. This is not the time to be in short-term Treasury paper.

As George Reisman has put it (Via an annonymous commenter at Free Advice):

The government today has unlimited powers of money creation. And so it is highly likely, given its evident willingness to use those powers, and the overwhelming public support that exists for using them, that the increase in the supply of money it brings about will ultimately outweigh the present increase in the public’s demand for money for holding. When and to the extent that that happens, and business sales revenues and profits begin to rise and employment and wage rates begin to rise, the public’s demand for money for holding will once again begin to fall.

At that point the massive increase in the quantity of money the government is currently bringing about will fuel sharply rising prices and give birth to a new crisis.

Fire Larry Summers!

George Reisman on the man who is going to be Obama's "lead economic adviser inside the White House.”:

Summers should be fired. He’s too shallow and ignorant and his ideas too evil for him to serve in the United States Government in any capacity. Although generally viewed as a prominent professional economist, his actual knowledge of the subject is minimal. This conclusion follows from the fact that the essential subject matter of economics is capitalism. And Summers' ideas on redistribution reveal that he fails to understand the nature of the most essential feature of capitalism, namely, private ownership of the means of production and the indispensable role it plays in the standard of living of the average person.

His views may qualify him to be an economic advisor to Hugo Chavez of Venezuela or Robert Mugabe of Zimbabwe, but certainly not to be an economic advisor to the President of the United States.

To see how Reisman reaches his conclusions read his full essay, here.