It can be argued, though, that the Fed has slowed money printing and that this is a factor that is causing the subprime crisis. Gary North, who is one of the best money watchers around, is watching the adjusted monetary base. He writes that "the adjusted monetary base has risen at [only] about 1.6% per annum since mid-March." This fact can not be ignored. But looking at the adjusted monetary base is looking at the ingredients of a dish before it is cooked in the oven. I prefer to look at a dish after it is cooked, for me this is the M2 (non-seasonally adjusted) Fed money number. M2NSA is growing at roughly a 6.0% annualized rate. Ron Paul, the only presidential candidate to understand economics (and probably the only candidate to actually look at money supply numbers) watches MZM money supply data. According to Dr. Paul, MZM money supply is growing at a 12% annualized rate. Thus, only Gary North's adjusted money growth figure can justify the subprime crash as being a business cyclical crash.

If, indeed, the M2NSA numbers or the MZM numbers are more accurate, then it suggests that the money that was going into the subprime sector is simply being re-directed and we will be in for a doozie of a recession once the business cycle does hit.

Here's a quick lesson on business cycles. The Federal Reserve prints money out of thin air and this distorts the economy as this newly printed money enters the monetary system, usually headed into the capital goods sector. When the printing stops, the capital goods sector crashes. Voilà, the business cycle. Why does the Fed eventually stop printing? Because all the money printing eventually causes serious price inflation that forces the Fed to stop printing before a runaway inflation begins. We are near this point now, with oil near $100 per barrel and gold over $800 per ounce. It's business cycle bust or runaway inflation, as choices for Mr. Bernanke.