To all those who say, "The Fed is printing money and it controls the money supply and it's debasing the currency and causing inflation" and whatever else...
Here is a chart of the monetary base against M2. As you can see, the base (which the Fed has direct control over) had zero correlation with M2.
Zero correlation.
Velocity of M2 at an all-time record low. This is screaming...the government's got to spend, spend, spend!
The big question in Europe: is the collapse of the economies of Greece, Spain and Ireland caused by a decline in the monetary aggregate M2, or is the economic decline causing M2 to fall? I would argue the latter, as lenders frantically try to pay off existing back and new borrowing is very low. Not everybody agrees with that. Here is Milton Friedman and Anna Schwartz....econoblog101
