by Alasdair Macleod, Gold Money:
By December, the most recent month for which statistics are available, the US dollar Fiat Money Quantity (FMQ) had grown to $12.48 trillion. This is $5.05 trillion more than if it had grown in line with the established average monthly growth rate from 1960 to the month before the Lehman Crisis.
By this measure of currency inflation, since August 2009 inflation is now 68% above trend. This is illustrated in Chart 1 below.
FMQ measures the difference between currency, measured by cash and deposits, and sound money by retracing the evolution of currency from gold and fully-backed gold substitutes. It is therefore fundamentally different from conventional measures of money supply, which compare changes in themselves over time. Instead it is a comparison between sound and unsound money.
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