CPI and the like should be thrown out the window. All that matters is monetary supply inflation (MSI). These are the real figures to observe. A thread showing that:
Current MSI is: 14.73% (versus 6.8% CPI)
The Apr20-Mar21 MSI = 28%.
Avg monetary YoY inflation since 1967 = ~6%.
Current MSI is: 14.73% (versus 6.8% CPI)
The Apr20-Mar21 MSI = 28%.
Avg monetary YoY inflation since 1967 = ~6%.
We know how many #Bitcoins there will be (21m), and we know the current total supply and the inflation rate (~1.77%).
But what about the same for the US dollar? Unsurprisingly, it gets very complicated:
forbes.com/sites/stevehan…
But what about the same for the US dollar? Unsurprisingly, it gets very complicated:
forbes.com/sites/stevehan…
The term ‘monetary aggregates’ is used to talk about the US money ‘stock’. And you may have seen these measures as M1-M5. But each category contains different types of money and has changed over time. So, it is hard to be exact about total US money supply.
richmondfed.org/~/media/richmo…
richmondfed.org/~/media/richmo…
Like CPI, ‘tricks’ can be played by having narrow definitions of money that don’t account for it all. In 2009, The Center for Financial Stability was set up to provide a high-quality measurement of money supply.
They argue simple sums of different monies is not accurate, and so use weightings to create the ‘Divisia M4’ (DM4) monetary aggregate for the US.
centerforfinancialstability.org/amfm_data.php
centerforfinancialstability.org/amfm_data.php
I’ve used this to run some figures to calculate monetary supply inflation – this is what I argue is all that matters. Throw CPI out the window and enter the Butler (😊) Monetary Supply Inflation (MSI) figure. This is a simple twelve-month average of the monthly YoY DM4 figures.
Latest Butler MSI: Nov20-oct21 = 14.73%.
Versus ‘inflation’/CPI inflation is 6.8%. The Butler MSI is nearly 15% and more like reality.
Peak Covid, the Apr20-Mar21 MSI = 28%.
Versus ‘inflation’/CPI inflation is 6.8%. The Butler MSI is nearly 15% and more like reality.
Peak Covid, the Apr20-Mar21 MSI = 28%.
Avg YoY DM4 monthly rate since 1967 = ~6%
This is the REAL figure you need to beat since 1967, just to not get poorer.
This is the REAL figure you need to beat since 1967, just to not get poorer.
As a final note, the first DM4 double-digit YoY figure recorded was in June 1971 - yes, the year of the Nixon Shock. Many double-digits figures have appeared since then...🤔
I called it the Butler MSI for fun - and so you know it was created by me, not some official economics figure. Hopefully, it fulfils the job I was looking for of a high-quality inflationary measure of money supply. It may already exist somewhere else...
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