Advantage 7 – The money supply cannot be manipulated

Excerpt from the book »Gradido – Natural Economy of Life«

»In doubt the Fed can rotate the dollar press as much as it likes and if necessary make a helicopter drop of  money to boost the economy.«

– Ben Bernanke

FED President

Since 2006 the Fed (US central bank) has no longer published the M3 money supply. Why not? Has the calculation become so confused and difficult that no reliable results are possible anymore? Or is the money supply so outrageously high that they no longer want to publish it?

The main aim of a central bank is to maintain the stability of prices and the value of money. It tries to achieve this by fixing the so-called prime rate so as to influence the money supply. The financial crisis shows that this is not possible. In the old system the money supply is manipulated by many uncontrollable factors, resulting in the usual suspects, such as inflation, deflation, economic and financial crises or even financial crashes.

The gradido money supply cannot be manipulated. It is fixed by the creation of money and its perishability and can only change with the size of the population. Hence, the money supply is the constant which the other parameters, such as the level of prices, have to align themselves with. After a levelling-out process the self-regulating system operates in a stable manner.