M1: "A Drifter"
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(Conspiracy Nation, 2/4/05)
-- About forty or so years ago, a type of person known as "a drifter"
was a species in this land. From time to time, you'd read about one of
them in the newspaper: For example, "Otis Campbell, a drifter, was nabbed for the
crime."
There was even a television show based on the adventures of a
misunderstood drifter: "The Fugitive," with Dr. Richard Kimble (David
Janssen) pursued relentlessly by Lieutenant Girard (Barry Morse).
These drifters gradually vanished as illegal immigrant labor
took all the jobs which used to sustain them.
Drifters were also sometimes "moody loners," according to
recurrent newspaper reports at the time. Since they were drifters
and/or moody loners, they had no apparent families and hence, no family
values.
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In the above chart ("Change in M1, Not Seasonally Adjusted"),
monthly changes in M1, a measure of the money in circulation, is
depicted. The chart shows changes from 1959 to the present. M1
variations initially are relatively minor, fluctuating by a billion
dollars or so. As the years progress, however, the oscillations
intensify, like a suspension bridge buffeted by a high wind. The M1 is
up and down by increasing billions.
The importance of the volume of money in circulation is central to
the economic theory of monetarism, whose leading exponent was Milton
Friedman. The monetarist theory is expressed by the equation, MV=PQ,
with M (money supply) multiplied by V (velocity of money turnover)
equaling P (price) multiplied by Q (quantity of goods and services).
So, if "M" (e.g. M1) expands, then "P" (i.e. inflation) is apt to
increase. [1]
Ronald Reagan, campaigning in Illinois in 1980, echoed the
monetarist position when he declared, "It's government that causes
inflation, and government can make it go away by cutting out deficits
and stopping the printing of money." [2] Ironically, it was during
president Reagan's stewardship that the United States went from being a
creditor to a debtor nation. M1 volatility also increased during the
Reagan years.
Recently, medical news was awash with stories about how so-called
"schizophrenics" are overly-inclined to see patterns and connections
between what "normal" people view as random events. The implication is
that "conspiracy theorists," apt to notice connections missed by most
people, are mentally ill. So, for example, were a conspiracy theorist
to see a connection between a Wall Street passion for an infusion of
funds and "Dubya" Bush's desire to alter Social Security, we can safely
say that such a person must be schizophrenic.
Truly schizophrenic would be to immoderately increase the money
supply as a way to give Wall Street a transfusion: Since MV=PQ, the
added dollars would only inflate the stock prices without augmenting
the actual value. Paradoxically, in spite of the schizophrenic nature
of the connection, shifting money from Social Security to Wall Street
would not add to M consequently not adding to P and thereby achieving a
boonfall in actual value.
In the old days, the Conspiracy
Nation editor happily drifted from town to town. He was
sometimes moody and sometimes alone. But hard times forced him to
relinquish his drifter lifestyle and he became a conspiracy theorist.
It was the force of economic circumstances: no longer was it feasible
to be a decent bum. ("Or was it schizophrenia?", darkly insinuate the
Lieutenant Girards.)
Economic schizophrenia might be evident in the above graph ("Change
in M1, Not Seasonally Adjusted"). If some sort of economic disaster
were to occur, such as hyper-inflation, a Wall Street deflation, or
monetary migration, would the newspapers report, "M1, a drifter, was nabbed for the
crime?"
------- Notes -------
[1] "monetarism" Encyclopedia Britannica online. 2005. www.britannica.com
[2] "Jimmy Carter vs. Inflation" Time magazine. 3/24/80
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