That vertical line at the end of the chart represents the money supply - a 450% increase. Scary? Inflationary? Maybe, but not so fast. Morgan Housel weighs in with some context:
Money supply has increased from $4 trillion a year ago to $18 trillion today.
A 450% increase!
That’s something you might see in a third-world country with hyperinflation.
But before you dump life savings into gold and build a bunker, here’s the punchline: The huge majority of the increase you’re seeing in this chart is not money printing or new money creation.
It’s an accounting rule change. . . .
Of the $14 trillion increase in M1, $11.2 trillion (80%) came from an accounting rule change that shifted money from savings accounts to checking accounts.
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