I'm gonna use base money as a measure of the money the Federal Reserve puts into the economy. I'm gonna use the Federal debt as a measure of the money the U.S. Treasury puts into the economy. And I'm gonna use FRED's TCMDO -- with the Federal government's share subtracted out of it -- as a measure of the money that everybody else puts into the economy.
(If that doesn't seem right to you let me know -- but be specific about the data I should use and where I can find it -- and I will do the graph over using your data.)
I'm going to look at the annual changes in these money measures (change in billions, not percent change).
I'm using Federal debt held by the public rather than "gross" Federal debt because the difference is borrowed from money that was already in the economy.
Here's a first look:
|Graph #1: A Stacked Area Graph showing Percent of Total|
(I duplicated the graph at FRED to get the link;)
The green area represents money borrowed in the private sector and spent into the economy. So I guess we can see who it is that has been putting inflationary amounts of money into the economy. I guess we can see who it was, in the years leading up to the 1965 debasement of U.S. silver coin, we can see who it was that generated the inflation that finally forced the hand of government, forcing the debasement.
It wasn't the Federal government that did the forcing. It was the private sector. The inflation that forced the debasement of U.S. coinage was due primarily to private sector credit expansion, not to the government printing money. Thus we are justified, saying that debasement occurred because the government's hand was forced. This forcing of government's hand by private sector credit expansion, this is a recurring problem. This is the problem that topples nations.
This is the problem that must be addressed.