Fed Increases Monetary Base by 16% in One Week

Howard S. Katz recently put this week's increase in the monetary base on his blog. The increase of over 16% in one week is historical. The United States increasingly looks like the Weimar Republic. Just one month ago I had a conversation with an economist who previously worked for the Fed. She insisted, correctly, that the money supply had not increased in several years (because foreign governments were monetizing our debt for us, creating an unstable monetary "game"). In just five weeks Ben Bernanke has proven her utterly wrong. The monetary base has gone from $888 billion on 9/11/08 to $1.74 trillion on October 16. In other words, Reserve Bank Credits increased better than 16% this week. This should double the money supply in the coming two years. This will cause inflation and a bull market in stocks, at least temporarily. However, there also may be dollar sales as foreign holders panic at this historic devaluation. A rocky road ahead. The chart and numbers follow.

Revving Up the Helicopter

Howard S. Katz of the Goldbug.net has published this revised chart of expansion of Federal Reserve Bank Credit. The reserve bank credits increased by another 50% since the last chart. This variable drives the amount of money in circulation in the United States. It is likely that both Barack Obama and John McCain have favored this step although none of the major media has asked or covered this question. If you are eager to pay 30% higher prices in order to subsidize hedge fund, Wall Street and commercial banking lobbies then vote for either candidate. This has nothing to do with regulation, sub-prime mortgages or bail outs. This is classic monetary inflation brought about by irresponsible political leadership.