If you want an updated chart of the adjusted monetary base, go here:
http://research.stlouisfed.org/publications/usfd/page3.pdf

This is what the chart looks like through 12/30/2010.

This chart does not correlate to QE2 (Bernanke’s money creation).  It was announced at the beginning of November and the Fed is supposed to buy $75 billion in assets each month (not counting rollovers) that will total up to $600 billion by the end of June (8 months times 75 = 600).  This new money should appear in the monetary base.  Meanwhile, it has barely moved since QE2 was announced.  It looked like it was finally going up, but then made a move back down in the last week.

What is going on here?  Is it possible that Bernanke would announce one thing and do another?  It certainly is possible, but I just can’t imagine how he would get away with it, particularly in today’s world of the internet.

I can’t explain what is happening right now other than the fact that it looks like the Fed has not expanded the monetary base like it said it would.  We will continue to monitor this chart weekly and look for a move upwards.  If the chart continues to stay flat or near flat, we might have to revise our outlook.  All signs point to price inflation and higher commodity prices in the future.  If Bernanke is lying and the Fed doesn’t go through with QE2 and the banks continue to keep their excess reserves high, we might have to plan for a depression sooner than we originally thought.