Doug French's daily article today inspired the question of what is the real value of adjusting to current dollars?
If you adjust dollars according to prices, you get some number, but how useful is that? In his article, todays banking losses are 80 times depression era losses. This calls into question the entire money supply and how that skews the interpretation of the numbers. That is, how is it possible that the numbers today, adjusted for inflation, are 80 times what they were during the depression? This suggests that the 8 trillion is less significant today because the economy has grown in a way not accounted for in the inflation adjustment. I can only guess that FRB allows this kind of exponential money supply expansion while affecting prices less severely.
Comments?