This page has been archived and commenting is disabled.

Chart Of The Day: Monetary Supply - It's Not A Marathon, It's A Steroid-Fueled Frenzy

Tyler Durden's picture




 

Curious why the mere prospect of a gold, or gold-linked "standard" (or any other hard-asset backing for that matter) - a monetary system in which the creation of money units, i.e., literally the creation of money out of thin air, is constrained by some real-world limitation is the scariest thing to the status quo, the following chart courtesy of Grant Williams should explain it all. It shows the expansion of the world's monetary bases coupled with the expansion in the world's gold supply over a comparable period. Needless to say, expanding the money supply at 8% in several years will hardly lead to the massive inflation needed to "inflate away" the roughly $35 trillion in debt overhang by now (vs $21 billion through 2009) that is crushing the entire developed world.

 

- advertisements -

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Tue, 09/18/2012 - 09:03 | 2806580 LawsofPhysics
LawsofPhysics's picture

And the Germans thought they were good manufacturers of inflation.  Just wait.

 

Is it any coincidence that that 362% increase over the same time period tracks the increase in net worth among the world's top 1%?

I think not.  Many families have come before you and yours.  Some of those families have been very successful, and they want their fucking rent, now pay up.  Long guillotines bitchez.

Tue, 09/18/2012 - 09:26 | 2806658 Cognitive Dissonance
Cognitive Dissonance's picture

"Some of those families have been very successful, and they want their fucking rent, now pay up."

Pay up sucker

Tue, 09/18/2012 - 09:50 | 2806722 WatchnSee
WatchnSee's picture

"Is it any coincidence that that 362% increase over the same time period tracks the increase in net worth among the world's top 1%?"

Maybe so, but that just means they broke even in real terms on their working capital against the inflating fiat currencies.

Tue, 09/18/2012 - 09:59 | 2806755 LawsofPhysics
LawsofPhysics's picture

They own real assets my friend.  If that is "breaking even", then it looks pretty good to me.  Many have private islands and private armies.  Yeah, that's my kind of "breaking even".  bring it.

Tue, 09/18/2012 - 09:00 | 2806581 Deep79
Deep79's picture

When is QE4 coming?

 

 

Tue, 09/18/2012 - 09:04 | 2806592 LULZBank
LULZBank's picture

We have, atleast, averted that with QEInfinity.

Tue, 09/18/2012 - 09:09 | 2806606 GetZeeGold
GetZeeGold's picture

 

 

Pick a number......any number.

 

Tue, 09/18/2012 - 09:11 | 2806613 tallen
tallen's picture

They'll soon be saying QE3 isn't enough, so we'll need QE3+ and QE3++.

Tue, 09/18/2012 - 09:11 | 2806614 Cognitive Dissonance
Cognitive Dissonance's picture

There will never be a QE4. Just endless upgrades of QE3 a la Windows QE3.11, QE3.666 etc.

Until that is they fire their last bullet into their own temple with $1 Trillion monthly "infusions" directly to the consumers. Look for Treasury EBT cards coming soon to a mailbox near you.

Tue, 09/18/2012 - 09:20 | 2806641 new game
new game's picture

3.666

til reset.

all relative to g and s; fret not.

Tue, 09/18/2012 - 10:17 | 2806822 ParkAveFlasher
ParkAveFlasher's picture

Look for Treasury EBT cards coming soon to a mailbox near you.

Isn't that already the dollar?  Is the dollar not a debt instrument exchangeable in goods?

How many persons removed are we all from true exchange of goods?  Between the corn farmer and your bag of organic tortilla chips, for example. 

TPTB print the dollar, they disperse the dollar, the set the tables that determine your personal dole based on your estimated debt and consumption trajectories throughout life, they pay the farmers via explicit subsidy (via controlling prices on exchanges) or implicit subsidy (as in ethanol requirements in each and every gallon of gasoline, guaranteeing consumption of grain products as long as the population is dispersed and requires automobiles)...

All ledger money is dole.  It is a calculation made.  Value is lost.  All value is lost. 

They export the inflation when overflows threaten, they import inflation when the reservoirs run thin, they tax and fee any efficiencies the people find that can be possibly squirreled away to the detriment of TPTB.  They yoke profits via regulations.  They can do this via infinite money creation which empowers key agents in the seminal markets to distort and control pricing.

 

Tue, 09/18/2012 - 10:44 | 2806927 Overflow-admin
Overflow-admin's picture

It will be a QE MILLENIUM!!!

Tue, 09/18/2012 - 09:17 | 2806632 Dr. Engali
Dr. Engali's picture

This is the last QE..it will go on forever now with slight modifications as the fed buys more "assets".

Tue, 09/18/2012 - 09:17 | 2806633 Vince Clortho
Vince Clortho's picture

QE Infinity takes care of that.

Tue, 09/18/2012 - 10:20 | 2806837 Againstthelie
Againstthelie's picture

We already have QE4ever. ;)

Tue, 09/18/2012 - 09:01 | 2806584 Cognitive Dissonance
Cognitive Dissonance's picture

So.......go long Gold?

<Don't forget Silver as well.>

Tue, 09/18/2012 - 09:02 | 2806586 JPM Hater001
JPM Hater001's picture

So the question then remains, does the gold standard go back in effect instantly by executive order just as it was removed or does congress give banks a running start and debate this for 6 months?

Actually scratch that.  It doesnt matter as gold will hit 50K either way.

Tue, 09/18/2012 - 09:10 | 2806610 bigdumbnugly
bigdumbnugly's picture

the banks would prolly be giving the order for the executive order.    so oh yeah they'll know.

Tue, 09/18/2012 - 09:25 | 2806652 youngman
youngman's picture

We will be forced to go on a gold standard...by other countries..they will no longer trade in US dollars....you are seeing it now...and it will speed up as the QE´s keep coming faster....

Tue, 09/18/2012 - 09:45 | 2806714 bank guy in Brussels
bank guy in Brussels's picture

With as little gold as the US may actually have, the replacement for the US dollar standard may be the US bullet standard

Maybe why the one thing the US won't cut as America goes broke is the spending on all the hundreds of US worldwide military bases, drone planes and other tools of death

Tue, 09/18/2012 - 09:04 | 2806594 tu-ne-cede-malis
tu-ne-cede-malis's picture

End the Fed Rally

September 22, 2012

http://www.endthefed2012.com/

Tue, 09/18/2012 - 09:39 | 2806691 goldfish1
goldfish1's picture

Media blackout, voila', did not exist.

Plenty of headlines lately saying that OWS doesn't have any "focus" and they have fizzled out.

1 year after encampment began, Occupy in disarray

 

Occupy withers, but message was heard

 

FBI: Monitoring Occupy was within rules

 

Occupy protesters celebrate in S.F.

[...] the crowd shrank as the night wore on, dwindling to about 80 people and four dogs after 10 p.m.

Tue, 09/18/2012 - 09:50 | 2806721 Zadok
Zadok's picture

Anybody spot riot dog! He's my favorite world traveller!

Tue, 09/18/2012 - 17:21 | 2808551 SeattleBruce
SeattleBruce's picture

The rally is happening in 22 cities.  It's a good start:

http://www.endthefed2012.com/event/

Tue, 09/18/2012 - 09:06 | 2806596 orangedrinkandchips
orangedrinkandchips's picture

How many times have we seen this movie?

Bubble after bubble after bubble.....IT HAS TO BE ONE BUBBLE OR ANOTHER.

Tue, 09/18/2012 - 09:09 | 2806599 Yellowhoard
Yellowhoard's picture

Let me summarize the Keynsians argument.

You can't eat gold.

Its a barbaric relic.

There isn't enough gold to back all of the money.

People that own gold are paranoid and crazy and stupid and not cool and smell and stuff.

Tue, 09/18/2012 - 09:19 | 2806637 Theta_Burn
Theta_Burn's picture

Dude you nailed it...

This guy certainly fits your discription. lol

I'm surprised nobody here is talking about this yet

http://www.lasvegassun.com/news/2012/sep/16/gold-worth-7-million-found-house-after-nevada-man-/

 

Tue, 09/18/2012 - 09:28 | 2806662 goldfish1
goldfish1's picture

The plebes focus on $7 million, not smell or recluse. Maybe they better put that old gold ring into the safe.

Tue, 09/18/2012 - 18:35 | 2808751 SeattleBruce
SeattleBruce's picture

And while you're at it, get a clear will written.  Wow, I wonder when that guy started stacking.  His gold increased 6 fold in fiat terms just since 2000...

 

"that old gold ring" - 'I wants the precious!'

Tue, 09/18/2012 - 09:08 | 2806602 IridiumRebel
IridiumRebel's picture

Long inkjet

Tue, 09/18/2012 - 09:10 | 2806611 GetZeeGold
GetZeeGold's picture

 

 

Wow....that crap is expensive

 

You must be rich!

 

Tue, 09/18/2012 - 16:57 | 2808484 Mr. Fix
Mr. Fix's picture


PM me @

TF Metals Report

(It's a great place for us stackers.)

Tue, 09/18/2012 - 09:08 | 2806603 adr
adr's picture

Kick the can until our generation is dead, leave it to the younger folks to figure out instead.

Tue, 09/18/2012 - 09:09 | 2806605 pods
pods's picture

Funny how exponents work.

Well maybe not so funny.

pods

Tue, 09/18/2012 - 09:11 | 2806617 Dr. Engali
Dr. Engali's picture

I think you're going to need a bigger chart.

Tue, 09/18/2012 - 09:13 | 2806624 Winston Churchill
Winston Churchill's picture

A much,much, bigger chart.

Tue, 09/18/2012 - 21:44 | 2809408 JPM Hater001
JPM Hater001's picture

Smile you son of a bitch

Tue, 09/18/2012 - 09:16 | 2806631 LawsofPhysics
LawsofPhysics's picture

There is no need for more QE thanks to ZIRP.

Tue, 09/18/2012 - 09:31 | 2806676 nope-1004
nope-1004's picture

You are only correct if you assume QE was used in the manner Ben said it would be.  I think different - I believe QE is a direct bank bailout, and nothing more.  All the big banks are 100% insolvent, period.  ZIRP doesn't repair capital ratios.

 

Tue, 09/18/2012 - 10:02 | 2806765 LawsofPhysics
LawsofPhysics's picture

Irrelevant as the commodity complex still needs to deliver real goods people need to survive.  So long as the banks are claiming this "wealth" on their books and it continues to grow, it will affect pricing in an increasingly unstable way.

Tue, 09/18/2012 - 09:21 | 2806638 Vince Clortho
Vince Clortho's picture

delete

Tue, 09/18/2012 - 09:22 | 2806646 monopoly
monopoly's picture

Yup, it is now to infinity. We are all set. All is well. Buy crap. That will keep the economy growing. 

Tue, 09/18/2012 - 18:38 | 2808773 SeattleBruce
SeattleBruce's picture

Right - and if you dare not agree with this, you're not patriotic, and downright unAmerican.

Tue, 09/18/2012 - 09:24 | 2806648 Bartanist
Bartanist's picture

If you believe one train of throught, gold has been mined on earth for over 300,000 years and some of it was taken off planet. However, the rumored remaining gold stocks of "the gods" (and the bible and most other ancient texts talk in the plural) amounts to quadrillions of dollars at today's price.

Maybe this sounds crazy, but maybe if so many of the ancient libraries were not destroyed by Rome (empire and church) or secreted away then this would be common knowledge.

Tue, 09/18/2012 - 09:28 | 2806663 Inibo E. Exibo
Inibo E. Exibo's picture

Did my stack just mysteriously get shinier?

Tue, 09/18/2012 - 09:29 | 2806668 Cognitive Dissonance
Cognitive Dissonance's picture

Time to sit back and let them feast on each other.

Lunch

Tue, 09/18/2012 - 09:32 | 2806678 GetZeeGold
GetZeeGold's picture

 

 

Might want to look behind you.

 

Tue, 09/18/2012 - 18:40 | 2808778 SeattleBruce
SeattleBruce's picture

Rehypothecation?

London 'whale'?

Tue, 09/18/2012 - 09:32 | 2806680 AynRandFan
AynRandFan's picture

I was under the impression that monetary supply growth should be compared to population growth and/or GDP growth, not some random metric such as the supply of mined gold.

Tue, 09/18/2012 - 09:40 | 2806702 Cognitive Dissonance
Cognitive Dissonance's picture

Might want to read the short article along with the chart.

Tue, 09/18/2012 - 10:29 | 2806869 AynRandFan
AynRandFan's picture

Uh, I did.  And if you read anything else, you might want to learn something about the link between GDP growth and population growth and the rationale for growth in a monetary supply.  Yes, there is a good reason we do not have a static supply of currency in a world whose population is increasing exponentially.

Tue, 09/18/2012 - 18:53 | 2808808 SeattleBruce
SeattleBruce's picture

I think that you could create a system of non debt based money, but the control of who creates/releases the money supply (say a Sound Money Commission) and changes to the money supply should reside in an accountable Congress (I know, I know!), and violations of the mandate for stable prices in such a system should be strict and swift - stiff jail sentences for violations and corruption of the system.  Basically everything that we haven't seen for the past 30, 60, 100 years...In such a system, gold would still stand as an accountable store of value.

http://economicedge.blogspot.com/2009/12/freedoms-vision-introduction.html

 

Tue, 09/18/2012 - 09:44 | 2806704 Kokulakai
Kokulakai's picture

Debt have your drains backed up?

Oh, QE man!

...And away goes trouble down the drain...

Tue, 09/18/2012 - 09:42 | 2806706 Shevva
Shevva's picture

Warning to ZH, about the 'of the day' part.

http://www.telegraph.co.uk/finance/newsbysector/retailandconsumer/9546965/Man-of-the-Match-Well-send-the-bill-later.html

Although I beleieve this is really why the west is on it's final legs, stupid moronic idiotic selling of anything not screwed down.

Tue, 09/18/2012 - 09:47 | 2806718 Zen Bernanke
Zen Bernanke's picture

this nonsensical QE issue will disappear when Romney is elected.  And his first order of business will be to relieve dr. bernanke of his duties and give him the private sector re-education he so desperately needs.

Tue, 09/18/2012 - 10:07 | 2806779 GetZeeGold
GetZeeGold's picture

 

 

Ben Shalom laughs....double clutches......and shifts into QE10.

 

Screw you Mittens.

 

Tue, 09/18/2012 - 10:36 | 2806892 AynRandFan
AynRandFan's picture

Bingo.

"One QE to Rule Them All" just two months before the election proved that the Fed plays favorites.  This is payback for Ron Paul and Paul Ryan.

Tue, 09/18/2012 - 11:27 | 2807098 Totentänzerlied
Totentänzerlied's picture

LOL!

Tue, 09/18/2012 - 10:20 | 2806829 Burticus
Burticus's picture

Though Grant Williams is about as honest-Injun as they get and the chart looks about right, his chart is flawed since it does not show the time period.

OBAMNEY = No Change

Libertarian Party nominee Gary Johnson ain't perfect, but he's not with the ruling elephant-jackass party and by far the best on the ballot.

Tue, 09/18/2012 - 10:22 | 2806846 Shizzmoney
Shizzmoney's picture

There needs to be a war on the money in the system.

If your currency is corrupt, your citizens will follow.

We are all just a part of the "Great Incredible Paper Chase".  Hamsters on a Wheel of Fail.

The only question I ask is: When does "time", stop?

Tue, 09/18/2012 - 10:33 | 2806880 AynRandFan
AynRandFan's picture

Large disproportions between the growth in money supply and population growth over a short term period are destructive, and it can be viewed in relation to gold.  It does not follow, however, that a gold standard for currency makes sense over a long term.  Here's why:  money in savings would increase in value for no other reason than population growth would increase the demand for it.  So, over a long term horizon, a gold standard would encourage saving over investing and stifle growth necessary to maintain a relatively even standard of living.

Tue, 09/18/2012 - 16:45 | 2808449 Mr. Fix
Mr. Fix's picture

Wrong!

Tue, 09/18/2012 - 11:16 | 2807058 jumped_ship_and_swam
jumped_ship_and_swam's picture

This post is sloppier than most.  I think the author means $21 trillion thru 2009, not $21 billion.  Also, there is no timeframe given.  Given that the gold supply increases at about 1.5% per year, I assume this is a five-year chart to show an increase of 8% in overall gold supply.  Therefore, it covers the timeframe 2007-2012, approximately.

 

 

Tue, 09/18/2012 - 12:23 | 2807247 SafelyGraze
SafelyGraze's picture

the message from the chart is clear

BoJ and Gold and ECB must expand their supply at a higher rate to catch up with BoE

otherwise, goods priced in BoE pounds will become so cheap that the nations of Japan, Europa, and Gold massively import, and thereby go deeply into debt.

especially the nation of Gold. its export days are over

Tue, 09/18/2012 - 12:25 | 2807367 SafelyGraze
SafelyGraze's picture

btw .. was at another tptb shindig over the weekend.  the 'billionaire taskforce' meeting.

hadn't appreciated before just how difficult things have become for them. the issue revolves around preserving wealth through the coming .. changes.

all of them want to use the shiny yellow vehicle for storage. but all of them know that if they procure it on the open market, the price will "not remain stable", and it will reveal publicly that "certain paradigms may have to be reconsidered".

it's an interesting problem. how to acquire a thousand bricks without
- paying for them
- mining them
- anyone noticing

it's not as easy as you might think. especially when a hundred other people are doing it too. and when none of them are especially good at "taking turns" and "no .. you go first"

 

Do NOT follow this link or you will be banned from the site!