Mailbag: Bear Trader writes: About the Money supply and the bubble

(Ed.note: "Bear Trader is a regular writer to the Observer. Click on the post for the monetary web site called shadowstats that he cites.)


Evans-Pritchard is in error about Milton Friedman. The "money supply
expansion a la outrance" is not a Friedman idea. Friedman was actually
a sound money guy. The massive money supply expansion is Keynesian.

A while back the Fed stopped publishing M3. I figured at the time this
had to be for political reasons. M3 increase in the last few years
really went wild, although, since the bubble burst - and the bubble
burst because of an amazing expansion of credit, an expansion that went
parabolic until the debts incurred could not be paid off - a series of
bubbles, actually, that started with WWI - M3 has been dropping even
though the Fed has been "pushing on the string" as hard as they can.

I find
http://www.shadowstats.com/
pretty accurate. Following graphs are from the shadowstats website: