The graph of Corrected Money Supply below shows a massive increase upto June 2011.

It has gone way above its previous peak at the end of 2005. But the situation is still (I am speaking of June, remember) a little less dangerous than it was then, as the graph of Velocity of Money below shows. Since then, of course, it has probably got a lot worse.

I wonder whether the real crash is going to occur in the treasuries market. Perhaps all those who bought treasuries at rock bottom yields are going to get a rude shock if interest rates go up. Buyers of short-term treasuries can of course hold them to maturity but those with longer-term treasuries may suffer a sharp erosion in capital.

If you haven't been keeping up with this blog you might want to read The riddle of money, finally solved which explains Corrected Money Supply.