US Base Money Supply Chart

It is charts like the one below that cause many economists to ring the siren of imminent hyperinflation. Pictorially, it would seem the massive influx of fiat cash will inevitably manifest itself as a spike in consumer goods prices. I am of the opinion that this chart is misleading, because in our debt-based economy money is not exclusively defined as Fed notes (cash), it is cash + credit. In fact, the amount of credit in the system so far outweighs the amount of cash, that the greater driver for inflation/deflation is, in fact, the credit supply. As any small business owner, homeowner, or credit card holder knows, the credit supply is contracting. The $600 trillion dollar question is: is the credit supply contracting faster than the Fed is printing money? My opinion: yes, rapidly.

Tarek Saab

Guardian Commodities

Tarek Saab is the President of Guardian Commodities and a former finalist on NBC's "The Apprentice" with Donald Trump. He is an international speaker and syndicated author.