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The chart above shows a comparison of the percentage growth in M1, M2, Real GDP and CPI during two ten-year periods: July 1972 to July 1982, and the most recent 10-year period from July 1998 to July 2008 for M1, M2 and CPI; and 1972:QII to 1982:QII and 1998:QI to 2008:QII for real GDP.

What the data show is that:

1. The percentage growth in M1 was about 3X greater in the 1972-82 period than the 1998-2008 period.

2. The percentage growth in M2 was almost twice as high in the earlier 10-year period.

3. Real GDP growth was roughly the same during both 10-year periods, but slighly higher in the most recent 10-year period.

4. The percentage increase in prices during the 1972-1982 period (132.7%) was almost 4X greater than the increase during the last ten-years (34.8%).

Despite the burst of monetary expansion in 2001 when M2 grew slightly above 10% for three months (calculated from the same month in the previous year) in response to the recession, that monetary expansion 7 years ago wasn't anything like the monetary expansion that took place between 1975 and 1982, when M2 growth exceeded 10% in 45 different months, and exceeded 8% in 115 months between the early 1970s and 1983.

Bottom Line: We're not anywhere close to the monetary expansion and subsequent inflationary environment of the 1970s, and since it's been 7 years since the very moderate monetary expansion of 2001, we won't get there anytime soon.