Economics Questions

Re: Comparing True Money Supply and Total Government Revenue

tcostel — Mon, 08 Aug 2011 01:15:31 GMT

By True Money Supply, I am referring to the Austrian Money Supply, as published here:

http://mises.org/content/nofed/chart.aspx?series=TMS

Re: Comparing True Money Supply and Total Government Revenue

John James — Sun, 07 Aug 2011 13:20:04 GMT

How are you defining "True Money Supply"? Is this the "Austrian Money Supply" alternative money aggregate, or is that just a term you're using for M1 or M0?

Re: Comparing True Money Supply and Total Government Revenue

Groucho — Sat, 06 Aug 2011 03:30:48 GMT

I believe this is due to Fractional Reserve Banking. You are probably looking at the "dollar supply" (currency & coins), M0, when the "money supply" is many multiples of this.

Most "money" is never converted into physical cash - it's just ledger/spreadsheet entries in various banks.

Comparing True Money Supply and Total Government Revenue

tcostel — Sat, 06 Aug 2011 00:34:31 GMT

I was trying to find out how much money the government took from the economy via taxation, so I decided to compare revenues with different statistisc. I used GDP, but I felt that would not be an accurate measure of taxation because GDP IMO is not the best measure.

So then I thought about comparing the money supply to tax revenues. I was surprised at the results. In the past 30 years, numerous years the tax revenue exceeds the True Money Supply. What is the explanation for this? To me it seems impossible. Does it have to do with debt?