LIVE Gold Prices $  | E-Mail Subscriptions | Update GoldSeek | GoldSeek Radio 

Commentary : Gold Review : Markets : News Wire : Quotes : Silver : Stocks - Main Page >> News >> Story  Disclaimer 
Latest Headlines to Launch New Website

Is Gold Price Action Warning Of Imminent Monetary Collapse Part 2?
By: Hubert Moolman

Gold and Silver Are Just Getting Started
By: Frank Holmes, US Funds

Silver Makes High Wave Candle at Target – Here’s What to Expect…
By: Clive Maund

Gold Blows Through Upside Resistance - The Chase Is On
By: Avi Gilburt

U.S. Mint To Reduce Gold & Silver Eagle Production Over The Next 12-18 Months
By: Steve St. Angelo, SRSrocco Report

Gold's sharp rise throws Financial Times into an erroneous sulk
By: Chris Powell, GATA

Precious Metals Update Video: Gold's unusual strength
By: Ira Epstein

Asian Metals Market Update: July-29-2020
By: Chintan Karnani, Insignia Consultants

Gold's rise is a 'mystery' because journalism always fails to pursue it
By: Chris Powell, GATA


GoldSeek Web

A dramatic upward reversal in US monetary inflation

By: Steve Saville, The Speculative Investor

 -- Published: Monday, 23 April 2018 | Print  | Disqus 

In February of this year the year-over-year rate of growth in the US True Money Supply, a.k.a. the US monetary inflation rate, was only 2.4%. This was its lowest level since March of 2007 and not far from a multi-decade low. In March of this year, however, the monetary inflation rate almost doubled — to around 4.6%. Refer to the following chart for more detail. What caused the reversal and what effect will it have on the economy and the financial markets?

The Fed has been slowly removing money from the economy via its QT program, so March’s money-supply surge wasn’t caused by the central bank. The main cause also wasn’t the commercial banking industry, because although there has been an up-tick in the rate of bank credit expansion over the past month it is nowhere near enough to explain the increase in TMS.

We can’t be certain, but by a process of elimination we conclude that the sharp upward reversal in the US monetary inflation rate was due to money coming into the US from overseas. If so, the most likely driver would be the repatriation of corporate profits due to the tax changes approved near the end of last year.

In other words, it’s likely that March’s TMS surge was due more to the way that the banking system accounts for existing US dollars than an increase in the total supply of US dollars.

If the monetary inflation reversal has more to do with a change in the way existing US dollars are accounted for than a sudden large increase in the pace of new dollar creation, then the effects on the economy and the financial markets will be minimal. In any case, after the monetary inflation rate has moved high enough for long enough to set in motion an artificial boom, a drop to a relatively low inflation level will inevitably lead to a bust (an economic recession and a large decline in the stock market, often accompanied by a banking crisis). For example, the pronounced rebound in the TMS growth rate from Q4-2006 to Q3-2007 did not stop the recession, the equity bear market and the banking crisis of 2007-2009.

This means that as a result of the 2017 decline in the monetary inflation rate to near a 20-year low, the die has been cast.

The big unknown right now is the timing of the bust that will occur in response to last year’s precipitous decline in the monetary inflation rate. Will it get underway during the second half of this year or will it wait until next year?


| Digg This Article
 -- Published: Monday, 23 April 2018 | E-Mail  | Print  | Source:

comments powered by Disqus

Regular financial market forecasts and analyses are provided at our web site. We aren’t offering a free trial subscription at this time, but free samples of our work (excerpts from our regular commentaries) can be viewed here.

E-mail: Steve Saville


Increase Text SizeDecrease Text SizeE-mail Link of Current PagePrinter Friendly PageReturn to >> Story

E-mail Page  | Print  | Disclaimer 

© 1995 - 2019 Supports

©, Gold Seek LLC

The content on this site is protected by U.S. and international copyright laws and is the property of and/or the providers of the content under license. By "content" we mean any information, mode of expression, or other materials and services found on This includes editorials, news, our writings, graphics, and any and all other features found on the site. Please contact us for any further information.

Live GoldSeek Visitor Map | Disclaimer


The views contained here may not represent the views of, Gold Seek LLC, its affiliates or advertisers., Gold Seek LLC makes no representation, warranty or guarantee as to the accuracy or completeness of the information (including news, editorials, prices, statistics, analyses and the like) provided through its service. Any copying, reproduction and/or redistribution of any of the documents, data, content or materials contained on or within this website, without the express written consent of, Gold Seek LLC, is strictly prohibited. In no event shall, Gold Seek LLC or its affiliates be liable to any person for any decision made or action taken in reliance upon the information provided herein.