QE hasn't greatly affected the money supply (MS). There are many ways of meassuring the MS: M1, M2, M3, MZM, M4... In general the one that best forecasts inflation is M2 (in USA M1 is better). Roughly speaking, M2 includes cash outside banks and highly liquid assets like money in most savings accounts, deposits, etc.
We have ranked some countries by the amount of increase in M2 from 1995 until receintly: China and Russia 24x, India 11x, South Africa 8.6x, Australia 5.5x, Singapore ang Hong Kong 5x, Norway 3.8x, UK 3.6x, USA 3.2x, Canada 3.1x, Eurozone 2.9x and Japan 1.7x. Shocking results: Norway increased its M2 more than double the Japanese delta.
We recommend the amazing web Trading Economics to get full economic data of most of the countries.
So continuing with QE, WHERE DID THE MONEY GO? Most of the QE doesn't go to increase the MS because bank reserves are not included in the MS. It only increases the so called Monetary Base (MB). That's the reason that we haven't found inflation so far in countries like Japan even though we have seen huge increases in the MB (new money as bank reserves). USA might not be the same. Here, you can read a perfect explanation.
To finish we want to show you the charts of the evolution of MB in EU and USA. Watching them you can appreciate that the last years USA has more than tripled the MB while the European Union didn't even double it. The Japanese one will be tweeted through our account @simplynorisk.
We have ranked some countries by the amount of increase in M2 from 1995 until receintly: China and Russia 24x, India 11x, South Africa 8.6x, Australia 5.5x, Singapore ang Hong Kong 5x, Norway 3.8x, UK 3.6x, USA 3.2x, Canada 3.1x, Eurozone 2.9x and Japan 1.7x. Shocking results: Norway increased its M2 more than double the Japanese delta.
We recommend the amazing web Trading Economics to get full economic data of most of the countries.
So continuing with QE, WHERE DID THE MONEY GO? Most of the QE doesn't go to increase the MS because bank reserves are not included in the MS. It only increases the so called Monetary Base (MB). That's the reason that we haven't found inflation so far in countries like Japan even though we have seen huge increases in the MB (new money as bank reserves). USA might not be the same. Here, you can read a perfect explanation.
To finish we want to show you the charts of the evolution of MB in EU and USA. Watching them you can appreciate that the last years USA has more than tripled the MB while the European Union didn't even double it. The Japanese one will be tweeted through our account @simplynorisk.
