by David Kranzler
Investment Research Dynamics
Q: “Why is the Fed reluctant to let the boom-bust nature of markets play out?”
A: “Because it what’s they’ve always done [since the Fed was founded in 1913]…Once you’re in power, you’re going to do what you can to defend the system as it is”
The best official measure of the money supply created by the Fed was M3. “Was” because the Fed under Helicopter Ben removed M3 from public view. But the “effective” money supply is the currency printed plus the “spendable” currency created by debt issuance. Currency from a loan behaves like printed money until the loan is repaid. But for the last 10 years the amount of the loans outstanding, and therefore the supply of “spendable” currency, has risen at an increasing rate.