Posted tagged ‘M0’

The Threat of Hyperinflation

December 19, 2008

In an article for CBS News about the auto industry bailout, Declan McCullagh references a report by Celent, a financial services consultancy.

McCullagh later wrote to Lew Rockwell that readers of the LRC Blog might be interested in some additional information he found in the Celent report, particularly that:

M0 money supply “has recently increased at a pace never seen before in US history,” and has increased as much in the last 90 days as it has in the last 83 years.

The M0, according to Wikipedia,  measures “currency (notes and coins) in circulation and in bank vaults, as well as cash (reserves) owned by banks that is held at the central bank. M0 is usually called the monetary base–the base from which other forms of money (like checking deposits, listed below) are created–and is traditionally the most liquid measure of the money supply.”

The stage has been set for hyperinflation in the United States. What remains to be seen is if the Federal Reserve Banking cartel can reign in the huge increase of currency they have created or if hyperinflation will happen despite their efforts to prevent it.

Given how wrong the Fed has been about so much lately, I’m not feeling terribly confident that they will be able to prevent hyperinflation. They don’t call him “Helicopter Ben” Bernanke for nothing.