M2

Japan's yen hit a 40-year low as the Bank of Japan (BOJ) raised interest rates to a 31-year high, ending yield curve control. The article argues that low interest rates in Japan reflected tight money supply rather than easy money, and current low money growth may hinder economic recovery despite rate hikes.

The article uses a personal anecdote to illustrate inflation's impact on purchasing power in Germany over 40 years, comparing newspaper delivery wages and ice cream prices. It highlights that inflation erodes savings and wages, disproportionately affecting low-income individuals, and cites historical examples like the French Revolution and the fall of the Western Roman Empire. Bitcoin's fixed supply is presented as a potential solution to inflation.

The article argues that CPI measurements underestimate true inflation by not accounting for monetary expansion that inflates asset prices rather than consumer goods. Since January 2020, approximately $8 trillion in new M2 money supply has been created, with the gap between M2 growth (24.5% in 2020) and CPI (1.2%) flowing into housing and equity valuations rather than being captured by traditional inflation metrics.