Money Supply, Measurement, and Historical Shocks

Defines money supply (M2), measurement limits, negative money shocks, and historical gold-standard deflation versus modern inflation drivers.

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What happens when the money supply grows too slowly or too quickly? From gold-standard deflation to QE-driven inflation and inequality, we trace the lessons of monetary history, and what we can do today to protect ourselves in an age of infinite money.

Topics covered include:

How is the money supply measured, and why is it a subjective exercise
What is an example of a negative money shock
Why an optimal monetary policy would lead to deflation, and why that is a good thing
What causes inflation
How quantitative easing contributed to wealth inequality
What is demurrage currency
The unorthodox way Richard Nixon sought to combat high inflation and a strong dollar
How to increase our wealth in an era of infinite money

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Show Notes

Distribution of Household Wealth in the U.S. since 1989—The Federal Reserve

M2 (M2SL)—FRED

Good Versus Bad Deflation: Lesson from the Gold Standard Era by Michael D. Bordo, John Landon Lane, and Angela Redish—NBER

Speech by Richard Nixon (15 August 1971)—CVCE

US - Total Market Cap Divided by M2 Money Supply—MacroMicro

Did Quantitative Easing Increase Income Inequality? by Juan Antonio Montecino and Gerald Epstein—CEPWeb

Does Quantitative Easing Affect Inequality: Evidence from the US - Nektarios Michail

Demurrage currency—Wikipedia