Already rising very fast, the M3 took off like a rocket after 2001. The Fed stopped publishing the M3 in 2006 (conspiracy theorists, please note.) But a quick look at the chart of its growth, and assuming its trajectory continued, clearly shows that the M3 grew by something in the range of 35 percent.
The entire growth of the economy under Bushenomics is accounted for by growth in the money supply.
The administration did not directly inflate the economy by 35 percent.
They pumped it by the size of the deficit. The rest happened this way.
When a government is "printing money" (running big deficits), the big fear is inflation.
Particularly in the financial community. Bankers make their money on interest, and inflation eats their profits, point for point.
The administration, very proudly, grew the economy (or at least the amount of money in circulation), without inflation. Which actually is a pretty good trick.
In part, they were able to do so precisely because the policy was a failure.
If it had created business growth -- actual business, not just financial business -- that would have created jobs. Then there would have been inflationary pressure. Especially if they were good, high paying jobs. If salaries for ordinary people go up, even a little, the total is a big sum because there are so many of us.
But due to free trade, outsourcing, bad economic policy, policies aimed at keeping wages down, and relentless union busting, good jobs were lost, to be replaced with low-wage jobs, when they were replaced at all. The proof is in that median income figure (down $2,000 per worker).
Due to free trade and outsourcing, consumer goods mostly went down too. The exception being in favored industries like pharmaceuticals, insurance and oil.
Finally, and this the key to the next step in the process, the Fed kept interest rates down.
Low interest rates mean that it's cheap to borrow.
The administration largely believes in supply-side economics (otherwise known as "trickle down," or "piss on the people."); if you increase the supply of something, consumers will appear to buy it.
The actual results are a perverse triumph of the idea.
The supply of money was increased. The price of money was kept artificially low.
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