CHART OF THE DAY: The Government 'Prints' A Lot Less Money Than You Think

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Inflation hawks like Jeffrey Lacker, President of the Richmond Fed, have warned that inflation is sure to accompany the expansion of the money supply under quantitative easing.  UBS’s Art Cashin has even declared that we are at risk of hyperinflation.

The concern is that the Federal Reserve is “printing” too much money.

However, the word “printing” is meant to be taken figuratively.

Money supply as measured by M2, consists of more than just printed money, or the currency in circulation.

While M2 is currently above $10 trillion, the actual dollar value of currency in circulation is about a tenth that amount.

Here’s a chart of the currency in circulation from the Federal Reserve.

 

currency in circulation

Photo: Federal Reserve

And here’s a chart of the money that’s actually printed each year:

chart of the day, volume and value of notes printed, oct 2012

Photo: Federal Reserve

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