Thursday, May 15, 2008

One Hundred Billion Dollars, Part 3

In 1980, there were $2 trillion dollars. In 2006, there were over $10 trillion dollars. In March, 2006, the Federal Reserve stopped tracking the M3 number here:

M3 does not appear to convey any additional information about economic activity that is not already embodied in M2 and has not played a role in the monetary policy process for many years. Consequently, the Board judged that the costs of collecting the underlying data and publishing M3 outweigh the benefits.

So I can’t figure how many total dollars there are now. But per Bloomberg, the Fed is printing $14.4 billion daily. If my math is correct, that equates to an additional $5 trillion/year.

Thus the inflation for real stuff like food and fuel. Something similar happened in Germany in the 1920s, and a beer ended up costing fifty billion Marks. Bad things happened after that.

Correction: That $14.4 billion number is a moving average of one subset of the Federal Reserve's printing.

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