Stagflation Update: Monetary Base
Stagflation update: the chart above compares the growth of the monetary base during the peak of the stagflation period of the 1970s (the 85 month period from December 1974 to December of 1981) to the growth of the monetary base over the last 85 months, from January 2001 to January 2008. (The monetary base is set to equal an index value of 100 in the beginning month of each sample period.)
Notice that there is a significant difference between the two periods: During the 1970s, the monetary base grew by more than 70%, compared to less than a 40% growth during the last 7 years.
Bottom Line: The money supply data (M1, M2 and monetary base) don't support the position that we are entering a period of 1970s-like stagflation.