Update of Austrian measures of the money supply

For Austrian economists doing economics is not about measuring things. However, it still can be useful to gauge the economic environment, whether that is the near term or long ago. Michael Pollaro here provide such an update of the money supply from over at Forbes. According to Pollaro:

TMS2, which represents our broadest and preferred U.S. money supply aggregate, posted a year-over-year rate of growth of 8.4% in October up from 8.1% in September. While still a robust rate, the U.S. monetary inflation rate is now substantially off its highs and in a decelerating trend. This is something not to be taken lightly. Indeed, as we discussed here, given the size of this our current monetary largesse, any substantive deceleration in the rate of monetary inflation from here ushers in the real possibility of another financial and economic bust, and a monumental one at that.


  1. I have a theory: For the production in the economy to keep up with the increase in the money supply, quality and safety may be sacrificed; i.e., GMOs in food production, hydro-fracturing and a kind of retrograde wind-harnessing (windmills) for energy, unskilled workers in trades, construction of houses with low-quality fixtures, etc. (in so far as production is keeping up, that is) Any thoughts on this?

  2. I just want to second what Mark said about Austrians not “measuring things.” It is very important to understand that the oney supply is only one of many variables that must be taken into account in Austrian economics. Do not be seduced by the simplicity of monetarist thinking.

    Often I have seen Austrians make strict predictions based on the money supply that have not proven out. This simply reduces the credibility of Austrian economics.Let’s leave the foolish predictions to Paul Krugman.

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