currency supply, English is MoneySuaply, Also known as Currency stock(Money Stock) shows the value of all the total currency in the market that a country circulates in the market within a certain period of time.Currency currencies in the market usually include cash, coins, bank account balances, and some tangible or intangible assets that are equally liquid and transactionability, such as the share of the retail currency market common fund share.
According to the increase in the types of types, the currency supply indicators are divided into different categories of M0, M1, M2, and M3.According to the increase of numbers, the currency types contained in the number increased in order.Different governments and financial institutions will use different currency supply indicators to analyze and predict the economy.
A country’s governments, central banks and other institutions will control the country’s currency issuance according to policy adjustments.In the past, the adjustment of currency supply will closely affect the economic environment of a country, including the amplitude of inflation and the speed of economic development.Compared with before, the relationship has become no longer so stable.
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Directory of this article
- What is the US currency supply?
- Types of US currency supply
- How to use US currency supply to analyze the US economy?
- The relationship between US currency supply and inflation in the United States?
What is the US currency supply?
US currency supply refers to the sum of various currencies circulating in the consumer market in the United States.
Currency supply includes multiple types of tangible assets (Physical Assets) and intangible assets.For example, coins, banknotes and other cash held by residents, savings deposits in deposit institutions, trading deposit balances in financial institutions, the balance of transaction deposits in financial institutions.And the share of the retail currency market.However, currency supply does not include long-term investment, net house value, loan amount, mortgage amount, credit card amount, and physical assets that must be sold to cash.
The US currency supply index is divided into: Monetary Base, M1, M2, and M3 according to different contents, but the M3 indicators are no longer used after 2006.All indicator data will be in the Federal Reserve Currency supply official website Perform weekly or monthly releases.
The US currency supply is the same as the currency supply of other countries, and it will directly affect the economic development of the United States, including inflation, economic development speed, consumer shopping ability, etc.At the same time, the US government and the Fed will also be based on the US economic environment.Change the currency supply.
Among them, the Fed’s policy is the most important decisive factor in the US currency supply.For example, when the Fed restricts the amount of currency supply through the currency tightening policy, the cost of lending will increase accordingly, which will suppress inflation, but at the same time, it may also leadEconomic growth has slowed down.
Types of US currency supply
The US currency supply is mainly divided into three categories: Basic currency (Monetary Base) As well as M1 and M2 And M3, which has not been disclosed since 2006.
Among them, M1 mainly includes the total cash held by the public and the sum of the trading deposit in the deposit institution, and is the most commonly used currency supply index.In M2, in addition to the sum of all currencies in M1, it also includes savings account deposits, currency market funds, and regular deposit balances below $ 100,000.The M3 is the most loose currency supply indicator, covering almost all tangible and intangible currency supply.
Fed(Federal Reserve) Currency supply official website Different currency supply indicators were released every week and each month, but since 2006, the Fed no longer releases the M3 index value.
| US currency supply types | Measuring method |
|---|---|
Monetary Base | Currency in Circulation, including coins and banknotes, and bank reserve balances (Reserve Balances). |
M1 | Contains all the total currency in the basic currency index, and contains:
|
M2 | Contains all the currency in M1 and contains:
|
M3 (Statistics after 2006) | Contains all the currency in M2 and contains:
|
How to use US currency supply to analyze the US economy?
Sometimes, currency supply indicators are closely linked to the GROSS DOMESTIC PRODUCT (GDP), price level and inflation.At the same time, it can make certain predictions on the future development of the economy.
Under normal circumstances, the increase in currency supply usually causes reduction in interest rates.Then consumers can borrow funds for consumption at lower interest, and enterprises can have more funds to increase production efficiency.Generally, they will stimulate consumption and accelerate.Economic development and improving employment rates.Conversely, if the amount of currency supply decreases or the growth rate decreases, the opposite will occur, that is, increased interest rates, decreased consumer consumption capacity, and shortage of corporate development funds.At the same timeLosses will cause the overall economic development to slow down and increase the unemployment rate.
However, from the beginning of the past ten years, the relationship between the currency supply indicators and the economic development, the relationship between GDP, and inflation have become as stable in the past.At the same time, it is impossible to achieve the expected economic regulatory purpose by adjusting the money supply.Even the former Federal Reserve Chairman Alan GreenSpan believes that if you still adhere to the monetary supply index M2 to guide monetary policy regulation, this will lead to economic recession.Therefore, although the amount of currency supply is still a widely used indicator, its guidance position in the final decision has been the same as that of a large amount of economic data.
The relationship between US currency supply and inflation in the United States?
The following is the M0 average from 1959 to 2021, and the CPI of the corresponding year is shown below.
[amcharts id = “Money-SUPPLY”]]We will list the data list in the figure above.At the same time, we list the annual changes of M0 and the CPI change rate of the corresponding annual fee.
| years | M0 (Millions) | M0 change rate | CPI | CPI change rate |
|---|---|---|---|---|
1959 | 50483 | 29.2 | ||
1960 | 50008 | -0.94% | 29.6 | 1.37% |
1961 | 49308 | -1.40% | 29.9 | 1.01% |
1962 | 50933 | 3.30% | 30.3 | 1.34% |
1963 | 52442 | 2.96% | 30.6 | 0.99% |
1964 | 55183 | 5.23% | 31.0 | 1.31% |
1965 | 58108 | 5.30% | 31.5 | 1.61% |
1966 | 61533 | 5.89% | 32.5 | 3.17% |
1967 | 64658 | 5.08% | 33.4 | 2.77% |
1968 | 69383 | 7.31% | 34.8 | 4.19% |
1969 | 73675 | 6.19% | 36.7 | 5.46% |
1970 | 77567 | 5.28% | 38.8 | 5.72% |
1971 | 83267 | 7.35% | 40.5 | 4.38% |
1972 | 89083 | 6.99% | 41.8 | 3.21% |
1973 | 94667 | 6.27% | 44.4 | 6.22% |
1974 | 103650 | 9.49% | 49.3 | 11.04% |
1975 | 108567 | 4.74% | 53.8 | 9.13% |
1976 | 114733 | 5.68% | 56.9 | 5.76% |
1977 | 122958 | 7.17% | 60.6 | 6.50% |
1978 | 134600 | 9.47% | 65.2 | 7.59% |
1979 | 147608 | 9.66% | 72.6 | 11.35% |
1980 | 158633 | 7.47% | 82.4 | 13.50% |
1981 | 164092 | 3.44% | 90.9 | 10.32% |
1982 | 172325 | 5.02% | 96.5 | 6.16% |
1983 | 183433 | 6.45% | 99.6 | 3.21% |
1984 | 195292 | 6.46% | 103.9 | 4.32% |
1985 | 210708 | 7.89% | 107.6 | 3.56% |
1986 | 230950 | 9.61% | 109.6 | 1.86% |
1987 | 253375 | 9.71% | 113.6 | 3.65% |
1988 | 272075 | 7.38% | 118.3 | 4.14% |
1989 | 283508 | 4.20% | 124.0 | 4.82% |
1990 | 302033 | 6.53% | 130.7 | 5.40% |
1991 | 318575 | 5.48% | 136.2 | 4.21% |
1992 | 341850 | 7.31% | 140.3 | 3.01% |
1993 | 376808 | 10.23% | 144.5 | 2.99% |
1994 | 411633 | 9.24% | 148.2 | 2.56% |
1995 | 434025 | 5.44% | 152.4 | 2.83% |
1996 | 448158 | 3.26% | 156.9 | 2.95% |
1997 | 472100 | 5.34% | 160.5 | 2.29% |
1998 | 502600 | 6.46% | 163.0 | 1.56% |
1999 | 551842 | 9.80% | 166.6 | 2.21% |
2000 | 585292 | 6.06% | 172.2 | 3.36% |
2001 | 618458 | 5.67% | 177.1 | 2.85% |
2002 | 673542 | 8.91% | 179.9 | 1.58% |
2003 | 716525 | 6.38% | 184.0 | 2.28% |
2004 | 752733 | 5.05% | 188.9 | 2.66% |
2005 | 782625 | 3.97% | 195.3 | 3.39% |
2006 | 811525 | 3.69% | 201.6 | 3.23% |
2007 | 827183 | 1.93% | 207.3 | 2.83% |
2008 | 987300 | 19.36% | 215.3 | 3.86% |
2009 | 1775475 | 79.83% | 214.5 | -0.37% |
2010 | 2009992 | 13.21% | 218.1 | 1.68% |
2011 | 2517508 | 25.25% | 224.9 | 3.12% |
2012 | 2641117 | 4.91% | 229.6 | 2.09% |
2013 | 3251700 | 23.12% | 233.0 | 1.48% |
2014 | 3926533 | 20.75% | 236.7 | 1.59% |
2015 | 3974442 | 1.22% | 237.0 | 0.13% |
2016 | 3763092 | -5.32% | 240.0 | 1.27% |
2017 | 3810467 | 1.26% | 245.1 | 2.13% |
2018 | 3641117 | -4.44% | 251.1 | 2.45% |
2019 | 3301433 | -9.33% | 255.7 | 1.83% |
2020 | 4615075 | 39.79% | 258.8 | 1.21% |
2021 | 6052600 | 31.15% | 271.0 | 4.71% |
2022 (As of March) | 6092800 | 0.66% | 284.6 | 5.02% |