Sometimes it’s good to reread stuff!

[Rich Toscano]

[quote=jeeman]Money supply + credit = inflation.
[/quote]

No. You cannot sum money and credit; they are two entirely different things. I’ve been over this many times… see the “Credit Deflation” part of this article: http://www.voiceofsandiego.org/toscano/article_8029a8dd-60eb-530f-8f60-25b75ea31527.html

[quote=jeeman]Look at 1996-2008: the money supply was fairly constant, hovering about $800B, but credit was getting looser and looser, increasing money velocity, and we had inflation.
[/quote]

Money supply was NOT constant from 1996-2008. See this graph:

http://research.stlouisfed.org/fred2/graph/?chart_type=line&s%5B1%5D%5Bid%5D=M2&s%5B1%5D%5Brange%5D=5yrs

Broad money supply more than doubled over that period.

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