Sunday, January 04, 2009

Current Global Money Supply Growth Rates

Is the global economy experiencing monetary inflation or deflation? That depends on which country you refer to. Below is a summary of the latest monetary statistics from various countries. For most countries I have simply stated one money supply figure, namely the one I think most closely resemble the proper money supply definition (As I discussed here and here, M1 and M2 have different meanings in different countries). For the U.S. I have several different definitions given the popularity of different definitions, and in order to illustrate why there has been monetary inflation despite deleveraging also the monetary base (MB). For China and Australia I also included two different definitions since I am uncertain to which extent the more narrow aggregate include deposits which should be included. In both cases the broader aggregate however clearly include deposits which shouldn't be included and as these deposits increase more than others, the true number is clearly lower than that of the broader aggregate.

USA (MZM):+11.9%
USA (M2) : +9,6%
USA (M1) : +16.4%
USA (MB) : +104.7%

Canada (M1++): +11.1%

Euro area (M1): +2.3%
Denmark (M1): +1.8%
Estonia (M1):-9.1%
Latvia (M1) :-8.8%

Sweden (M1
UK (M1): +9.3%
Switzerland (M2): +6.2%

Japan (M2): +1.7%
China (M1): +6.8%
China (M2): +14.8%
Hong Kong (M2 HK$): -7.6%
Australia (M1): +6.4%
Australia (M3): +16.5%
New Zealand (M2): +14.9%


Anonymous Anonymous said...

Could one draw the conclusion that USD and GBP will fall against the EUR and SEK because of their more expansive monetary policies?


10:47 PM  
Blogger Reginald said...

I wouldn't be surprised if the total bank credit in those regions have all decreased more than any of those increases.

11:53 PM  
Blogger Celal Birader said...

Hello Stefan,

I find it interesting that Japanese money supply growth was only 1.7%.

Would you expect this to accelerate in 2009 as a policy option of the BOJ assuming it is concerned about the current level of the USD/YEN exchange rate ?

1:36 AM  
Blogger stefankarlsson said...

Göran, yes in principle, though it should be noted that much of the decline in the GBP has already occurred, and that the aggressive recent cut by the Riksbank weakens the case for SEK (But on the other hand, SEK has already experienced much weakness.

Reginald, actually in for example Sweden and the euro area bank credit has increased more.

Celal, yes, the Bank of Japan will probably act to weaken the extremely strong yen, which will probably imply higher money supply growth.

11:27 AM  
Anonymous Anonymous said...

Hi Stefan,

Will the GBP and the USD return to the way they were or is the exchange rate a relative wealth system where growing economies say China will take more of the pie and so on? How will these 2 currencies fare against the rest of europe and asia?


3:39 PM  
Anonymous Akbar said...

If you look at PPP, EUR is overvalued against the dollar. Even adding an inflation premium, it still looks like EUR/USD is rich. SEK is undervalued against EUR, not sure re: dollar. In any event, Sweden is very trade dependent on eurozone plus it has substantial net foreign liabilities. Stokke tends to underperform in bad times (unlike Swissie). All bets are off of course if there is a general dollar crisis which is possible.

2:15 AM  
Blogger Sabine K McNeill said...

Well done, Stefan, to think about the global money supply and to publish the figures!

However, I miss M0, i.e. the interest-free Cash component.

Or how do you explain the supply of interest to pay off all the credit to yourself?

Most curiously yours,
Organiser, Forum for Stable Currencies

8:17 AM  
Blogger stefankarlsson said...

Louise, that depends on which currencies you compare them with, but the GBP will certainly perform better than the USD, given the massive beating it took during 2008.

Akbar, I'm not sure which PPP you're talking about, but according to the OECD, EUR is not overvalued against SEK. Both are somewhat overvalued against the USD, but not dramatically. And in any case, I don't think domestic goods PPP is of much relevance for exchange rates. Trade- and interest rate trends are of greater relevance.

Sabine: M0 is not of much relevance since it doesn't include deposit money.

I'm not sure I understand why you ask about paying interest to yourself, but if that is meant to question why deposit money is included, the money for that interest of course comes from the people who borrow from the bank. These days that income has fallen, but then again, most deposits included in the money supply doesn't pay any interest these days either.

2:17 PM  
Anonymous Anonymous said...

Hi Stefan and all,

Ok, how would the GBP and USD play out against currencies like the SGD, SEK, EUR? It does sound like what has been talked about before in various forms. But what would you say is the short answer? And returning to my previous qsn, is it right to liken the forex system to a relative one where up and coming economies take more of the pie (i.e. become stronger) and leaving less for the rest?


2:38 PM  
Blogger stefankarlsson said...

Louise, the SGD is a currency with a managed exchange rate vs. the USD, and it will probably not move much either way. If Singapore's economy weaken dramatically, it is likely to be devalued somewhat.

Both SEK and GBP are at this point undervalued versus the EUR and are more likely to rise than fall, especially if we see some kind of temporary statistical recovery from all the "stimulus" packages.

4:24 PM  
Anonymous Anonymous said...

Stefan, do you think SEK is undervalued against US dollar and therefore is more likely to rise against it as well? Thanks.

6:11 PM  
Blogger stefankarlsson said...

Yes, I do think SEK is undervalued against USD, even more so than against EUR.

6:39 PM  
Anonymous Anonymous said...

Does the fact that SEK is undervalued even more against USD than EUR in your view mean that USD is overvalued against EUR? Thanks.

11:00 PM  
Blogger stefankarlsson said...

Yes, it does.

11:15 PM  
Anonymous Anonymous said...

Hi Stefan,

I came across this article today on EUR/GBP parity. What do you think?


10:49 AM  
Anonymous Anonymous said...

oops i forgot the link haven't I?

Here it is


3:58 PM  
Blogger steve said...

Hej Staffan,

I converted 50,000 sek into pounds when the rate was 12.34, I thought this was low.

Would you recommend that I now buy more at around 11.35 (I could manage a further 25,000) to decrease the average price I have paid?

It would be possible for me to leave this money in pounds for a couple of years if necessary.

Do you think it will eventually return to the rate of around 13.5 SEK for 1 GBP?

Thanks for your advice.


9:43 PM  

Post a Comment

<< Home