Zeev's Turnips Patch-No Politics (ZEEV)

[Elroy Jetson]

Although Monetarists call M2 the "money supply" it is actually a summation of money and debt, mostly debt.

Calling M3 the "debt supply" would be more nearly correct.

What you say makes sense if you accept, the conventional Monetarist nonsense that, growth in the economy is dependent upon growth in debt.

This concept is both wrong and dangerous.

This foolishness provided the basis for growing our debt levels ever faster than the growth in income, as shown in this chart.

http://home.pacbell.net/nstuart/Debt_Federal_v_Total.gif

With each passing year, each dollar of additional debt is associated with less and less growth - primarily because debt is not the cause of growth.

Eventually the economy can support no further debt. Our economy becomes ever more dyspeptic as we reach that point.