The interest rate is the ratio of the valuation of present goods as compared to future goods. The most direct indicator of social time preference is the rate of interest. To further understand this point, the following passage by Hans Herman Hoppe makes it much easier to understand. This distorts the collective time preferences of society causing misallocations of capital. Why is the money stock growing at such a high rate during an economic contraction? Well, it wouldn’t be outrageous to assume we have actually become less productive since the year 2000 as we have enacted policies that actually destroy capital formation, such as easy money/cheap credit via artificially low federal funds rates. We can’t just assume the rise in this money stock is an exact measure of inflation, as increases in productivity negate this to some degree.

It also takes time for all the enacted government policies to work their way to the TMS, thus, this should be considered a very conservative estimate of the inflation already created. Though we have seen a modest rise in prices despite what the misconstrued C.P.I tells us, inflation has already begun to a modest degree (for all those who have been to the grocery store lately, prices are rising), but it takes time to fully work its way into the system, as expectations play a large role. (More on the TMS Later.) As we all know, unnecessary increases in the supply of money and credit lead to rising prices. The Following Is the Most Current Measure of This Money Stock: 7.016 Trillion Demand Deposits Due to Foreign Official Institutions Demand Deposits Due to Foreign Commercial Banksħ. Time deposits are also excluded from this measure as they are also not immediately available for use in exchange. It also excludes Money Market Mutual Funds (MMMF) because these investments must be sold in exchange for money first. It only counts immediately available money for exchange without prescribing to the errors of the Federal Reserve’s money supply measures such as double counting.

This measure is superior because it represents the amount of money in the economy that is available for immediate use in exchange. This money stock measure is known as the TMS or True Money Supply. The best measure of the money stock in the economy can’t be found on some federal reserve or other government agency's website, for they publish various money stock figures that either include items that aren’t money, leave items out that are, or have nothing to do with the money altogether.

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