Inflation, deflation and fiat systems

Some charts on Money supply. Courtesy Jessie.

As a reminder, in a purely fiat monetary system, inflation and deflation are the result of policy decisions, and not any endogenous factors in the economy.    Extreme outcomes such as a protracted deflation or hyperinflation are almost always the result of some policy decision which may be in error, unless they are caused by some exogenous shock or force.

This is a fundamental fact of how a fiat money system works, and what makes it different from a system in which the money is tied to some external control or standard, or some other relatively inflexible metric from the perspective of the system.

Please see Money Supply: A Primer if you wish for an explanation of some of these money supply measures.

And for all the Austrian econommists, I have included True Money Supply as the second graph.