As the world’s central banks keeping merrily “printing” new currency, it is hard to know how much the money supply is growing. It is especially hard to keep up with it because you have to know how to define the money supply, much less estimate changes to it.
Fortunately Michael Pollaro does this for everyone on a Forbes blog. Right now the numbers are pretty stunning. Both US and Japanese money supply increases are off the charts. What you need to know is that all this money printing is completely unsustainable. The tears start when the rate of increase starts to decelerate. To keep a monetary bubble going, it isn’t enough to print vast quantities of new money. The rate of increase must keep accelerating. Since that is mathematically impossible, tears are certain to follow.
US Fed chairman Ben Bernanke is no fool. But he is taking one day at a time, and is in the thrall of a bogus Keynesian economic theory that he can decelerate monetary growth without tears. If he is wrong, and both logic and history are against him, he will have created untold suffering for the poor and middle classes of the world.