Daily now there is talk of price inflation in Australia with the latest government data claiming CPI inflation is down to 4.1% at the end of 2023. But anecdotally one sees prices going up much faster than that.
According to the Merriam-Webster dictionary price inflation is defined as
a continuing rise in the general price level usually attributed to an increase in the volume of money and credit relative to available goods and services.
The M3 money supply is one form of the monetary stock of a country. The Reserve Bank of Australia provides historical data on this in local currency. I however was able to download it from the Federal Reserve FRED site. I decided to use the available M3 supply because I could not get the M2 money supply data for Australia back to 1960.
Chart 1 shows the growth of the M3 money supply from 1960 to the present time. By taking the gradient or rate of change of the curve I calculated the annual price inflation rate due to the M3 money supply growth. The result is shown in the red curve in Chart 2 below.
Chart 2 shows the annualised inflation rates as calculated from the Australian M3 money supply and CPI inflation as provided by the Australian Bureau of Statistics. It is quite obvious that there is a significant difference between the two statistics. Over 65 years CPI inflation has rarely been anywhere near the official government CPI inflation numbers. Surprisingly in 2023-2024 they are the same. For all other years CPI inflation is a fraud, a total fraud.
On examination of the M3 inflation statistic you’ll notice that inflation rises before entering a recession and falls through the recession. 2020 recession is the exception. And as we know 2020 was the year that started the QE helicopter money program of the Federal Reserve and something similar was copied by the Reserve Bank of Australia (RBA).
This led to real inflation of over 12% per annum by 2021. Let’s not forget the central banks are not ‘fighting’ price inflation, but they are the cause of it with their fiat currency printing. Nevertheless they claimed by raising the prime lending rate they were fighting it. The RBA has quickly increased rates to so-called get ‘inflation under control’. Nonsense!
But soon the US Federal Reserve banks and all other central banks must pivot and reduce rates else they will utterly crash the monetary and financial systems. Just yesterday the first major central bank — Swiss National Bank — cut interest rates. This is just the beginning.
The Western nations do not have even their fake CPI inflation down to their so-called target rate of 2% annually and they are beginning to cut rates, which causes stocks to soar and it looks like gold also. Prepare now!
Recommended Reading
- Book: Apocalypse Now: On the Revelation of Jesus Christ
- Book: Merchants of Death: Global Oligarchs and Their War On Humanity
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