How do we measure the adequacy of pre-modern monetary supply?

The statement is, on its face, absurd. "Monetary supply" is an inappropriate term to describe the economic workings of the era. In today's economy, there are practically as many definitions of "monetary supply" as there are economists (or, at least, statistical agencies), and there is no meaningful definition for the term in a pre-modern context. I suppose that the author here simply meant coinage, but then he falls into a different fallacy.

Gold and silver coins are a convenient means to store and transfer value. However, they are far from the only means and historically have rarely been the dominant means. Credit, ranging in sophistication from tokens and tally sticks to bills of exchange; paper money; commodity money, ranging from measures of grain in ancient Mesopotamia to pelts in colonial America; and other tokens such as wampum and cowries; all compete with gold and silver in the "marketplace of money". Gold and silver have advantages in this marketplace - they are durable, portable and broadly fungible - but they are hardly irreplaceable. Rather than to say that the supply was inadequate, it would be better to say that there was unmet demand for gold and silver in the European marketplace.

The great question is, thus, to what degree did the influx of American silver increase the money supply, as opposed to simply displacing other forms of exchange. Unfortunately, most of the other forms of exchange are all but invisible to the historian. We can hardly do better than guess at the number of tally sticks and I.O.U.'s used in the past, or estimate how that number has changed. Researchers interested in the question scour the most basic documents of the era - particularly banking and shipping records and contracts of all kinds. It is a complex question and you'll find plenty of spirited disagreements in the literature.

"Adequacy" is not a technical term and will be hard to apply without reflecting modern biases.

Estimations of historical inflation expectations (see the 2016 paper by Carola Conces Binder) could be part of a judgment on monetary adequacy. Tracking trends of cash transactions against bartering and home production is difficult because those mostly go unrecorded.

Some risk factors and coindicators for inadequate money supplies are:

• issuance of scrip
• periods of inflation with little coinage
• transactors complaining about sparse cash
• businesspeople storing more of their worth in goods
• being in a colony or frontier with no local coinage

Sketch answer: Money can be used for small scale trade (grocery shopping), wages, long distance trade and to store value. I differ two scales of trade because I believe the needs of a merchant managing shipping between Venice and Damascus are different enough from those of a piper buying bread & beer. We can look at these four uses for a given time and place:

• Shopping: Did people usually pay directly in coin, or did they use tally sticks, buckskins, or other forms of cashless payment?
• Wages: Was labor paid in goods or coin? Was labor even wage labor or managed differently, like corvee?
• Trade: IOUs between traders? I read somewhere that these where used extensively in pre-modern times, don't have the source now.
• Store of value: From an older answer by Samuel Russel, about European middle ages:

  A few families would have concentrated wealth, but this wouldn't be liquid capital, it would be static textiles used for display, or cloths. We know this from the viciousness with which churchmen and nobles forced "sumptuary" laws on rich town dwellers to stop them from wearing hats too big, cloaks with too many folds, or shoes that were too long.

In a medieval society, there were fewer less transactions requiring money: Up until the 19th century, the majority (one figure: 80%) of a poor person's income would be spent on food. When the majority (ballpark: 80% for middle ages, likely too low) are peasants, producing their own food plus tax, you have ~60% of likely transactions taking place within one household. Money supply becomes more important, the more transactions take place between people who don't know each other & the less closed an economy is.

When investigating this question, I believe you arrive quickly at a chicken and egg question - did changed, modernized social relationships necessitate more money (and thus encourage the plunder of the new world) or did the money supply fuel an economic transformation? This would be economic theory and I won't go into that here. But I think if you look at the use (or not!) of cashless payment system, you have a hint of the people then and there saw their money supply as adequate.