<If the definition of inflation is an increase in money supply, then how can money supply increase faster than inflation?>The CPI-U, a carefully massaged and hedonically adjusted measurement of consumer prices, depends upon supply/demand in the consumer sector.I report the official 12-month CPI-U. http://data.bls.gov/timeseries/CUUR0000SA0?output_view=pct_1...John Williams backs out the real numbers and finds a much higher inflation rate.http://www.shadowstats.com/In any case, the amount of money changing hands in the hands of consumers is much lower than the amount of money issued to the banks by the Fed. First, because the Money Multiplier <1. Also, the Velocity of money is very low. John Hussman explains how that suppresses the inflation rate.Wendy
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