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We won’t spend time on an extended discourse on why “fiat” money is superior to gold-backed money, other than to say it doesn’t make sense to limit the growth of the money supply to something as disconnected from real productivity and economic expansion as the stock of gold held by the government.
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Growth in real output (i.e., real GDP) will increase the demand for money and will increase the nominal interest rate if the money supply is held constant. On the other hand, if the supply of money increases in tandem with the demand for money, the Fed can help to stabilize nominal interest rates and related quantities (including inflation).
Best Answer: The money supply at any time IS the real money supply. What you might have meant to ask is how do you calculate real changes in money supply over time. That would be done by taking the nominal rate of growth and subtracting the rate of inflation.

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