Some scary numbers...Current trends suggest the annual US M3 money supply will grow by about 30% in 2008, and that the rate of change of the M3 money supply will go from the blistering current monthly rate of about 18% to a whopping 30% (or more?). The next US president is going to inherit the biggest financial mess that any president has ever had to inherit - a recession coupled with a massive trade deficit, out of control money supply growth, deflating asset prices and so on. Pity whoever it is...
Note that from the beginning of 1981 to the end of 1992, the growth of the US M3 money supply was brought down from about 10% annually to negative 0.5% annually (that's right - shrinking money supply by 1992). Then, in 1993 this abruptly reversed until at the end of 2000, the growth in the M3 money supply once again ballooned out of control reaching 10% annually. This is also the period of time that the US trade deficit ballooned out of control (primarily due to giving China "most favored nation" trading status). But most folks thought it was a great time (due to not considering the longer term ramifications of these developments). The next president inherited this fiscal mess along with a recession and the unexpected 911. Things were slowly getting under control again, until about the end of 2006 when the annual growth in the M3 money supply came down to about 5%. Then along came the credit crunch of 2007, bringing things to where they are now.