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2009.05.28
What is money?
What is money and what is meant by inflation of the money supply? How can we measure inflation? You will get many different answers from different economists as to how to measure money: M0; M1; M2; M3; MZM; and TMS. I believe that the last one mentioned (TMS or True Money Supply) is the correct measure. It was proposed by the late Murray Rothbard, an economist of the Austrian school of economic thought. Unfortunately no government agency measures TMS but Paul van Eeden has developed an approximation of TMS for the US which he refers to as Actual Money Supply (AMS). You can find out what real money is by reading his article on the subject which is short and easy to understand at http://www.paulvaneeden.com/The.Actual.Money.Supply. He has updated the graph of monetary inflation to April 2009 at http://www.paulvaneeden.com/Actual.Money.Supply.
This is all well and good and it helps us to understand what money really is but how can we use this information to make sensible investment decisions? I will address this question in my next post.
Gerry
21:23 Posted in Finance | Permalink | Comments (0) | Email this | Tags: m0, m1, m2, m3.tms, ams, murray rothbard, paul van eeden
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