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There are several
different monetary aggregates used to measure a nation's money supply. These
monetary aggregates can be thought of as forming a continuum from most liquid
(money as a means of exchange) to the least liquid (money as a store of
value).
The following figure
indicates compiled data for the most commonly used measures (M0, M1, M2 and
M3) from 102 currencies representing 138 countries.
Three of the five monetary unions can be clearly seen above. The remaining two are
the IEOM which uses the French Pacific Franc in three member countries, and the
East Caribbean Currency Union which uses the East Caribbean Dollar in eight
member countries.
The following
graph shows the growth of money supply since 1971, a year selected for the
reason that the last remaining currency to be convertible to gold, that being
the US dollar, was made inconvertible on Aug 15, 1971.
Currency in
Circulation
Four currencies (EUR,
USD, JPY and CNY) comprise nearly 75% of all circulating banknotes and coins
within the public domain.
|
Country/Union
|
Currency Code
|
Amount
(Billion US$)
|
Percent of all Circulating Currency
|
|
European Union
|
EUR
|
1035.2
|
24.30%
|
|
United States
|
USD
|
850.7
|
19.97%
|
|
Japan
|
JPY
|
762.4
|
17.90%
|
|
China
|
CNY
|
492.3
|
11.56%
|
|
India
|
INR
|
140.3
|
3.29%
|
|
Russia
|
RUR
|
110.8
|
2.60%
|
|
United Kingdom
|
GBP
|
87.5
|
2.05%
|
|
Canada
|
CAD
|
43.8
|
1.03%
|
|
Switzerland
|
CHF
|
40.3
|
0.95%
|
|
Poland
|
PLN
|
37.7
|
0.89%
|
|
Brazil
|
BRL
|
37.3
|
0.88%
|
|
Mexico
|
MXN
|
34.3
|
0.81%
|
|
Australia
|
AUD
|
32.4
|
0.76%
|
|
Others (89)
|
-
|
554.9
|
13.03%
|
The following graph
shows the historical outstanding stocks of M0 for currencies analysed in this
essay.
It is apparent
that the quantities of money are increasing in an accelerating fashion. In
1990, the total amount of currency in circulation passed US$1 trillion.
Twelve years later, the total amount exceeded US$2 trillion. This doubled
again less than six years later in early 2008.
The author is of
the opinion that while we may likely experience a continual lowering of asset
prices, the substantial increases to the money supply will lead to continuing
higher prices for consumer goods.
This may lead to a
view that both inflation and deflation are occurring simultaneously, but when
one applies the classical definition of inflation - that being an increase to
the money supply - such apparent discrepancies disappear
Mike Hewitt
Editor
DollarDaze.org
Also
by Mike Hewitt
Mike Hewitt is the
editor of www.DollarDaze.org, a website pertaining to commentary on the instability of the global
fiat monetary system and investment strategies on mining companies.
Disclaimer: The
opinions expressed above are not intended to be taken as investment advice.
It is to be taken as opinion only and I encourage you to complete your own
due diligence when making an investment decision.
© 2007 DollarDaze
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