May 18, 2009

Money Supply Update……

Don’t be deceived by the FEDS claim of “deflation”, as April's Consumer Price Index dropped below 0 for the first time in over 50 years. But that is simply due to the components the FED chooses to include, thus manipulating reality is easier to do. Even in April, should the CPI have been calculated as it was in the 80’s, showed a 6.74% increase (April 09/April 08).

Though we are taught government spending “stimulates the economy”, the empirical data shows the massive capital injections have yet to stop the bleeding. Industrial production broadly speaking contracted 16%, making It the worst month thus far. This could be looked on with a fairer light, but the narrowing in the trade deficit was far less than that of industrial production.

WHAT THIS MEANS?  The systematic solvency continues to worsen as the enormous capital injections over the last two years can’t stimulate economic activity as seen the drastic increase in unemployment and economic production. Price Inflation is not likely more than 12-18 months off, but once it starts, it will only accelerate and an increasing rate.

FRED Graph

Money Supply Figures-

Monetary Base: 1.82 Billion (April 08 : 860 Billion)

M3 (calculated from various FED data releases): 14.62 Billion 

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