The Adjusted Monetary Base, Long-Term
April 21, 2009
You probably know that I provide numerous monetary statistics and charts in my site's department, Federal Reserve Charts. If you search Google for "Federal Reserve charts," my department is the top hit.
One of these charts is the Adjusted Monetary Base, long term. It is published by the Federal Reserve Bank of St. Louis.
If you look at this chart, you see two sharp increases in the dark line, in late 1999 and 2001. The first was followed by a sharp decline. That was what caused the recession of 2001. The second increase was the Federal Reserve System's response to the recession of 2001. In mid-2002, the FED began reducing the increase in the money supply. It took six years for this to produce another recession. But this one is a whopper.
You can see the FED's response, beginning in mid-2008: the fastest, sharpest increase in history. It has not produced mass inflation. It will, unless the FED reverses policy. If it does, we will get a depression.
