I'd read in a few et threads about the expansion of the money supply that the Fed has been undertaking and how potentially irresponsible that is. And I just looked in Barron's and saw the numbers for myself. (And looking at economagic.com, I can see it even more clearly.) But here's what I don't get. There's only 3 ways for the Fed to increase money supply: 1. Lower discount, etc. rates. 2. Buy T-bills which puts money back into the system. 3. Change reserve requirement. They haven't done #3 in recent history as far as I remember and they couldn't have been doing #2 with our deficit rising, right? And they had to keep lowering rates to avoid deflation? So while I see the money supply's meteoric rise, I just don't see how the Fed is "responsible". Are we arguing that the Fed should have raised interest rates because the theory I heard is that that would have crushed the economy and the market? Also, why does noone watch money supply anymore? It used to be arguably the most-watched macro # and now it seems like noone cares. Is this analagous to noone watching corporate earnings before the bubble? Finally, if money supply has increased so drastically, why aren't we seeing a little inflation by now?