Five years ago, the M2 definition of the US money supply (including coins, currency, checking and savings accounts, CDs and money market funds) was about $7 trillion. At the beginning of 2011, it was near $9 trillion.Today it is approaching $10 trillion.
This inflation of the money supply, completely unrelated to the growth of the economy, is not sustainable forever. At some point, the market will react to this depreciation of the US dollar. So, it is important to ask just what the US government is trying to accomplish with this monetary expansion and if there are any plans to rein in the problem before an inevitable crash.
There are some, with whom I largely agree, who think that the US government has gone so far into debt that it is no longer possible to ever pay it off in current-value dollars. In this scenario, the US government can pretend to pay off its currently existing tens of trillions of dollars of future Social Security, Medicare, and Medicaid benefits with a future dollar that is close to worthless. Read More