Sounding Familiar

clipped from mises.org The economic position that the United States is now in is the result of a series of economic bubbles. To explain the nature of bubbles, I'm going to start by talking about their history; I'm not going to go all the way back to Tulip Mania and John Law, but I do want to mention some things from the Roaring Twenties that might sound familiar to us today. Over the eight-year period of that boom, the money supply increased by 62 percent. I always talk about the economics of booms and bubbles in the framework that Murray Rothbard outlined in his great book, What Has Government Done To Our Money. He points out that inflation confers no general social benefit. Just creating more money does not create more benefit for the general public. It merely redistributes wealth to the first people to receive the new money. Since 1998, the money supply (as measured by M2) has doubled. So we have an expansion in the money supply now that is similar to what we had during the Roaring Twenties.