US Money Supply Growth Unable to Sustain Current Economic Activity

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Chapter XX: Interest, Credit Expansion, The Trade Cycle, § 8 : The Monetary or Circulation Theory of the Trade Cycle (Picture: http://speaklibertynow.com/2013/06/02/recovery-crash/)

Current US Money Supply growth reached a peak in growth in March 2013 this year and has since declined. In the phase March to June ’13 we saw markets rolling over reflecting the lack of fuel to sustain the upward momentum of the markets. Whilst still positive it appears unable to support the asset valuations of stock, commodity and property markets. We see these markets are at serious risk of experiencing large falls to reflect the disparity between money supply activity and market valuations.

Given the prolonged phase of money expansion that has happened in the US we predict a prolonged rise in interest rates with the potential for severe falls in asset markets, rising unemployment and outbreaks of inflation in late 2013 , early 2014.

Once again this reflects the wisdom of Ludwig von Mises and the Austrian Economics approach, as the entire recovery since March 2009 has been based entirely on credit expansion and fallacious Keynesian economic policy-making.