Saifedean Ammous on the appreciation of the Iraqi dinar in 2003

Should a currency credibly demonstrate its supply cannot be expanded, it would immediately gain value significantly.  In 2003, when the United States invaded Iraq, aerial bombardment destroyed the Iraqi central bank and with it the capability of the Iraqi government to print new Iraqi dinars.  This led to the dinar drastically appreciating overnight as Iraqis became more confident in the currency given that no central bank could print it anymore.  A similar story happened to Somali shillings after their central bank was destroyed.  Money is more desirable when demonstrably scarce than when liable to being debased.

~ Saifedean Ammous, The Bitcoin Standard, p. 68

Ryan McMaken on recent contraction in the money supply

The fact that the money supply is shrinking at all is so remarkable because the money supply almost never gets smaller.  The money supply has now fallen by $2.2 trillion (or 10.2 percent) since the peak in April 2022.  Proportionally, the drop in money supply since 2022 is the largest fall we've seen since the Depression.  (Rothbard estimates that in the lead up to the Great Depression, the money supply fell by 12 percent from its peak of $73 billion in mid-1929 to $64 billion at the end of 1932.)

~ Ryan McMaken, "The Money Supply Has Plummeted in the Biggest Drop Since the Great Depression," Mises Wire, May 11, 2023

Mike Wilson on money supply growth on the risk of inflation

It’s fair to say we have never observed money supply growth as high as it is today. The Fed may not be in control of Money Supply growth which means they won’t have control of inflation either, if it gets going.

~ Mike Wilson, Morgan Stanley chief U.S. equity strategist, "The ballooning money supply may be the key to unlocking inflation in the U.S.," CNBC.com, August 5, 2020

James Garfield on money supply and the business cycle

Whoever controls the volume of money in our country is absolute master of all industry and commerce...when you realize that the entire system is very easily controlled, one way or another, by a few powerful men at the top, you will not have to be told how periods of inflation and depression originate.

~ James Garfield

James Garfield
1902-1903

Ed Bugos: investors are "playing poker" and "calling the Fed's hand"

The difference between this new high in the stock market and the others (2016, 2013, 2011) that have occurred over the course of the latest unsoundly inflated global economic boom - besides how narrow and generally hollow it is - is that the other new highs were caused by an unexpected boost in the money supply that happened first while this one has been caused by expectations for a boost in the money supply (that's how they lower the rate of interest) that has yet to happen.

What that means my dear friends is that the bulls are playing poker. They have driven the stock averages to new heights and in doing so are calling the Fed's hand. If the Fed fails to cut rates and earnings don't come in particularly well, the market is likely to take a very big hit.

~ Edmond Bugos, July 24, 2019

Kevin Duffy on how Milton Friedman was guilty of data mining when studying the Great Depression

Milton Friedman studied the Great Depression and noticed that money supply dropped by one-third from 1929-1933.  He came to the conclusion that this was the cause of the depression and that the Fed hadn't acted strongly enough.  He also influenced a guy by the name of Ben Bernanke who, at Friedman’s 90^th birthday party, vowed not to make the same “mistake.” 

Did the Fed really sit by idly as Friedman claimed?  Actually, no.  The Fed acted aggressively, buying government securities and expanding its balance sheet from 1929-1933.  It also lowered the discount rate from 5% to 1 ½%.  Friedman appears to be guilty of data mining.  Correlation doesn’t prove causation.  In fact, gold flows and loss of confidence in banks were contributing factors to the contraction in money supply.  If anything, the monetary inflation of the Fed probably made matters worse.

~ Kevin Duffy, "Mr. Market Flunks the Marshmallow Test," Grant's Spring Conference, March 15, 2017

Time magazine on the Fed doing "practically nothing" to stop the contraction of the money supply in the early 1930s

[Milton] Friedman blames unknowing monetary policy in large measure for the magnitude of the Depression of the 1930s. Partly because so many banks failed between 1929 and 1933, the U.S. supply of money shrank by 33%—and that compounded a worldwide economic collapse. The Federal Reserve, which took a narrow view of its responsibilities, felt itself almost powerless to reverse the tide of events. Not really understanding what should be done, it did practically nothing to offset the contraction of the money supply.

~  Time, December 19, 1969

Philip Fisher on the inevitable bullishness of war for stocks

What do investors overlook that causes them to dump stocks both on the fear of war and on the arrival of war itself, even though by the end of the war stocks have always gone much higher than lower? They forget that stock prices are quotations expressed in money. Modern war always causes governments to spend far more than they can possibly collect from their taxpayers while the war is being waged. This causes a vast increase in the amount of money, so that each individual unit of money, such as a dollar, becomes worth less than it was before. It takes lots more dollars to buy the same number of shares of stock. This, of course, is the classic form of inflation.

~Philip Fisher, stock legend, "Five More Don'ts for Investors", Common Stocks and Uncommon Profits, 1958

Bruce Bartlett on the root cause of the Great Depression: sharp contraction of the money supply

As economists Milton Friedman and Anna Schwartz proved to the satisfaction of most economists, the core economic problem in the early 1930s was a contraction of the money supply by a third. This caused the general price level to fall by about 25%.

Deflation caused real wages to rise, forcing employers to lay off workers to reduce labor costs; it forced businesses to go bankrupt because they had to sell goods for less than they cost to produce; it magnified the burden of debts as borrowers had to repay loans in dollars worth more than those they were lent; and it increased real interest rates and the real burden of taxation.

~ Bruce Bartlett, "The Real Lesson of the New Deal," Forbes.com, February 13, 2009

Mayer Rothschild on the power of central banking

Give me control of a nation's money supply, and I care not who makes its laws.

~ Mayer Rothschild, private banker

Frank Shostak on Fed balance sheet expansion from 1931-1932

[T]he pace of the Fed's pumping in terms of the yearly rate of growth of its balance sheet (Fed Credit) jumped from 10.9% in August 1931 to 154% in July 1932. Yet bank lending had continued to decline — falling on average during this period by 22% (we suggest that this occurred on account of declining pool of real funding). As a result, the monetary measure AMS fell during this period on average by 11.3%.

~ Frank Shostak, "Why Is Bernanke Trying to Fight the Bear?," Mises.org, January 30, 2008