"[Inflation and] huge deflation can and has occured with no significant change in the currency supply."
d:
"Untrue. While I have already pointed out to you that the very definition of inflation IS an increase in the money supply, you prefer to use the certain effect of inflation and call it a cause. Very well."
Please see post # 189 above.
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d:
"I have taken the liberty to compile some statistics for you. The 1960s and the 1990s had very similar statistics: real growth= 28%, monetary growth = 44%, and the cpi up 30% during the two decades. The 1970s and 1980s had far worse stats: lower real growth (24%), much higher monetary growth (96%), and the cpi up 86%. That is stark realism. Source of figures for both cpi and real (i.e. constant dollar) growth was statistical Abstracts of the U.S. (available online) and the Fed was the source of M1 growth (also available online)."
Check this out:
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Each bar in the graph represents an annualized rate of growth over the indicated five-year period. The green bars show the growth in the M1 money supply relative to the growth in the real GDP. The red bars show the growth in the consumer price index.
As can be seen, the average inflation rate grew through the 1960s and 1970s, then dropped steadily thereafter. The rate of growth of the M1 money supply increased more or less steadily throughout the whole period.
During the period when the inflation rate was growing, the money supply growth rate lagged significantly. By the 1990s, the inflation rate had dropped to its lowest level in 30 years, while the money growth rate reached its highest level, and in fact exceeded the inflation rate.
M1 represents transaction money, consisting of checking accounts and cash held by the public. One must conclude that whatever the causes of inflation during this whole period, an excessive growth rate in the M1 money supply had little or nothing to do with it.