- The money supply keeps on inflating…
- The Fed can’t even define the dollar…
- Robert Kiyosaki’s latest book shows you the compounding power of weekly income…
Dear Reader,
The president has denounced Federal Reserve Chairman “Too Late” Jerome Powell for failing to reduce the federal funds rate.
Yet in inflation-adjusted terms — in real terms — the actual rate squats beneath 1%.
It would soon run negative if the Federal Reserve reduces rates much.
Meantime, the money supply balloons and balloons.
It has ballooned some $600 billion since the middle months of 2023 alone. Handsome!
In fact it has expanded, month-over-month, in eight of the previous twelve months.
And as I noted recently: The M2 money supply runs presently to record heights — exceeding even the monetary deliriums of the plague.
Is this the picture of monetary restriction?
I do not believe it is.
The Trend Isn’t the Dollar’s Friend
As observes Mr. Ryan McMaken of the Mises Institute:
- Just to get to back to the money-creation trend that existed in 2019 before the “great covid inflation,” total money supply would need to fall by at least three trillion dollars.
What about the Federal Reserve’s behemoth balance sheet? Have not Mr. Powell and mates drained liquid from the thing?
Mr. McMaken:
- The Fed has repeatedly lowered its targets for reducing its balance sheet. At its March meeting, the Fed’s FOMC, which had previously pledged to reduce its treasury holdings by as much as $25 billion per month, reduced the cap to only $5 billion per month. The FOMC has also capped its mortgage asset monthly drawdown to only $35 billion. Not surprisingly, money supply growth [has] accelerated.
Again I ask… is this the picture of monetary restriction?
Gold’s Beating Them All
Thus I am unsurprised to learn that gold is this year’s tip-top asset — to date at least:
Source: Financial Times, Bloomberg
Gold presently fetches some $3,400 the ounce.
Yet as Freedom Financial News contributor Jim Rickards is keen to illustrate:
It is not gold that is on the wax. It is the dollar that is on the wane.
Their respective prices do not exist in isolation.
In high contrast to gold stands the waning dollar of the United States. It has proven a sawdust asset this year, last among the assets listed.
What about gold’s junior metal, silver?
Over $6.50 for a Tiny Fraction of One Silver Ounce
Yet the melt value of that pre-1965 quarter presently exceeds $6.50.
The silver price rises presently to approximately $36 the ounce — a 13-year height.
A pre-1965 United States quarter harbors 0.1808479 troy silver ounces.
Yet the melt value of that pre-1965 quarter presently exceeds $6.50.
Thus I am tempted, strongly, to scare up all the silver in my possession… and turn it over at melt value.
As with gold, silver itself is not advancing. It is the dollar that is receding.
I can merely conclude that the Federal Reserve is a poor, poor custodian of its charge, the dollar.
Yet it should not surprise us. That is because the Federal Reserve cannot even define the dollar itself.
I do not stretch the facts.
What on Earth Is a Dollar Anyway?
Consider:
The United States dollar was once defined by standards of measure.
That is, as 416 silver grains. Or as 1/20th of one gold ounce. No longer.
Perhaps we can define the dollar as 100 cents. Well then, what is a cent? The answer is 1/100th of a dollar.
Yet what — again — is a dollar?
Thus you embark upon an infinite chasing of your tail.
Imagine a butcher who cannot measure a pound. Imagine a mapmaker who cannot measure a mile.
It is as if 2.54 centimeters no longer define an inch but a foot.
As if 12 inches no longer defined a foot — but an inch.
Or that three feet no longer defined a yard… but a mile.
We must conclude that today’s dollar is largely an abstraction.
It is as wispy as gossamer, as slippery as eels, as elusive as quicksilver.
M This, M That
Thus the Federal Reserve steers by the swaying and erratic lights of varying money supplies.
These include M0, M1, M2, MZM, etc.
Here we have money, near money, money at second and third remove, money somewhere within the ghostly ether.
And so the monetary authority stumbles along in pitch darkness.
But do not rely upon my slanted and cynical word.
Rely instead upon the authority of the “maestro” himself — Mr. Alan Greenspan — who conceded long ago that:
- The problem is that we cannot extract from our statistical database what is true money conceptually…
- One of the reasons [is] that the true underlying mix of money in our money and near money data is continuously changing…
- A decision to base policy on measures of money presupposes that we can locate money. And that has become an increasingly dubious proposition.
They cannot even locate money! How do you like it?
Gold and silver, these a man can locate. He can get his hands on them.
They cannot be fanned into existence or out of existence at a keystroke.
Give me true money, I say. It is the money I want.
You may keep your false money — if you can even locate it.
Brian Maher
for Freedom Financial News
