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Questions tagged [money-supply]

Use for questions primarily related to the stock of money, either narrow money (MB or M0), and broad money (M1, M2, etc). This can also be used in questions related to the creation of money by governments and central banks, including questions related to models with a money market like IS-LM, where the supply is of importance.

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What are exported inflation and imported inflation?

I read in some articles that there are such notions as "exported inflation" and "imported inflation". But it was not written about in detail. What are exported inflation and ...
Mike_bb's user avatar
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3 votes
2 answers
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Why didn't M1 grow much during 1970s inflation?

One of the most widely cited reasons for the '70s stagflation was expansionary monetary policy employed by the central bank. Below is M1 during this time period (source), and it does not look like ...
A. Shultz's user avatar
-1 votes
1 answer
93 views

Why must goods in the country will be purchased with the entire money supply in the country?

In russian books it's written that there is balance between commodities and money. And this balance guarantees that all goods in the country will be purchased with the entire money supply in the ...
Mike_bb's user avatar
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0 votes
0 answers
21 views

Money supply question

If relative interest rates in US dollars compared to other countries currencies go up assuming everything else stays the same does this automatically decrease the money supply? At first you would ...
Erin Brennan's user avatar
0 votes
1 answer
164 views

Could Gaza have been "one of the wealthiest states on the Mediterranean"?

According to this transcript, (I don't have access to the original interview), Robert Kennedy told Krystal Ball: The international aid agencies have given Hamas, have given Gaza more than 10 times ...
YouDontSay's user avatar
-4 votes
1 answer
242 views

Money creation - why do we need deposits and why do banks give out money? [duplicate]

Currently studying elementary economics but there's this one concept that I'm struggling to wrap my head around at the moment: money creation. The way I understand it, banks can create money "out ...
l337n00b's user avatar
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0 votes
2 answers
62 views

Good books on money creation and monetary theory?

I just finished reading "Where does money come from?" (Ryan-Collins) on how commercial banks create the bulk of the money supply, and I am still hungry for more material that will help me ...
dreamerboy's user avatar
1 vote
0 answers
47 views

Why would bank runs lead to a decrease of the total quantity of money supply M1?

It‘s specifically about the German banking crisis of 1931. I get how the banks increasing their reserves and cutting their loans (starting 1930) would cause money contraction (at least of M1). Doesn‘t ...
Iris L's user avatar
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0 answers
12 views

Design of a money skew economy (target: museums/libraries loan rotation sharing)

I was thinking about libraries and museums, and began wondering how such institutions might institute what I would describe as a "money skew economy." Skew in the math sense, of two lines ...
G. Putnam's user avatar
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0 answers
27 views

Is there a global flow of income?

If I understand the circular flow of income correctly, we can visualize money moving around the country in exchange for goods and services. Sources of money are the central bank (MB) and the financial ...
user avatar
1 vote
1 answer
577 views

Where is the central bank in the circular flow of income?

In the five-sector breakdown of the circular flow of income (below), we account for leakages and injections from the financial, government and overseas sectors. My understanding is that the government ...
user avatar
0 votes
2 answers
503 views

How do bonds & shares relate to the money supply?

Non-eocnomist here. I'm trying to understand how money works, and what "money supply" means. I understand about how banks take deposits and lend them out, turning short term loans (the ...
Paul Johnson's user avatar
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0 answers
36 views

How do write downs impact the money supply?

This is a bit of a mix of micro and macroeconomics, but someone asked me how write-downs would impact the money supply this week. I didn't have a good answer. Usually, this isn't that big of a deal. ...
turbonate's user avatar
0 votes
1 answer
56 views

What's exactly the T/Y value in the Quantity Theory of money simplified equation: MV=PT or MV=PY?

I understood the basic fundamental principle of the theory, that all things being equal, a change in the money supply affects price level. Yet, now I am trying to understand this statement ‘ The QTM ...
EBUFF01's user avatar
1 vote
2 answers
130 views

Where did the money supply go?

The money supply went from about \$4 trillion in 2020 to about $20 trillion today. Where did all that money go? When the money supply went from about \$1.4 trillion to about $1.7 trillion, I was ...
QuietInMontana's user avatar
1 vote
1 answer
42 views

If the interest rate is increased to limit inflation, doesn't that increase the money supply?

If the interest rate is increased to limit inflation, doesn't that increase the money supply? Because one year later, 5% of the total bond will need to be created and put into circulation. This, in ...
Stefanie Gauss's user avatar
0 votes
1 answer
74 views

Large quantity sale of CNY at current currency value

Some company wants to sell large quantity of CNY and buy USD on Forex. Let current currency value is 1 CNY = 0.14 USD at the time moment on Forex. When company sell large quantity of CNY, money supply ...
Mike_bb's user avatar
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2 votes
1 answer
218 views

How to prove that an increase in the money supply leads to devaluation of the currency?

In one article I've read that increase in the money supply leads to inflation and exchange rate change. For example, if we have double increase in the money supply then we'll have double change in ...
Mike_bb's user avatar
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1 vote
1 answer
135 views

What happens to the money supply when a bank is allowed to go bust

I'd like to ask this question in two different ways just to help clarify the issues. Scenario 1. There is no deposit insurance and the central bank take no special action in response to the bank ...
Mick's user avatar
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1 vote
1 answer
87 views

Bank loans are often offered as a mechanism of money creation--but how is money created long term?

I've been reading on money creation. Bank loans are often cited as a mechanism of money creation: working based on fractional reserves, banks issue loans to the public based on deposits, thereby "...
eriophora's user avatar
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2 votes
1 answer
57 views

How would a Central Bank Digital Currency be different from a private bank deposit?

Both are digital, both can be transferred digital, and both are denominated in the same currency. A CBDC is "a direct liability of the central bank, rather than of private banks or coin issuers&...
ras's user avatar
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1 vote
3 answers
212 views

Money Creation Confusion

I've been studying money creation recently and have come across some contradictory statements and different types of theories that I'd like to clear up. The classical theory of money creation which ...
ayazasker's user avatar
1 vote
2 answers
275 views

How can Real GDP increase while Money Supply remains fixed?

I'm studying the Money Market Graph with it's Money Demand and Money Supply curves. In the classical model they teach the Money Demand curve as sloping down to the right while the Money Supply curve ...
ayazasker's user avatar
-2 votes
1 answer
69 views

Does demand decrease when supply increases? [closed]

I’ve been reading about supply and demand and I don’t know if I’m misinterpreting, but it seems like what they’re saying is that when the quantity supplied of something increases, the quantity ...
Anthony Fallone's user avatar
1 vote
1 answer
75 views

How exactly is money supply related to the price of goods and services?

I keep hearing that prices of goods and services are based on the money supply, so, for example, if there was only one good or service in the entire economy, that good or service would be worth the ...
Anthony Fallone's user avatar
2 votes
1 answer
65 views

Are there valid concerns of USD hyperinflation post stimulus?

This article The Dollar Endgame is probably one of many doomsday predictions that exist, but there were a few points mentioned that were new to me and seemed scary: "Debt virtually always has a ...
benjamin deworsop's user avatar
0 votes
2 answers
81 views

How can debt be larger than gdp? [closed]

government is taking debt because they spend it all at once and pay it over time so if you spend all at once there will be increase in gdp(multiple increase in gdp as money changes hands multiple ...
user43223's user avatar
2 votes
1 answer
70 views

What are these yearly spikes in the Russian Money Supply?

During a school project, I realized there are these consistent annual spikes in the Russian money supply chart. Any one know what these are? https://tradingeconomics.com/russia/money-supply-m2
Pears's user avatar
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-1 votes
2 answers
81 views

What have banks mostly done with their "excess reserves" obtained during QE

I put excess reserves in quotes because I know that in many countries there are no reserve requirements, so what I really mean by "excess reserves" is reserves in excess of what banks like ...
Mick's user avatar
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-1 votes
1 answer
104 views

How does lending “create” money? [duplicate]

I keep hearing that when banks loan money, it creates money and increases the money supply. But this confuses me. Wouldn’t the money have to have already been created in order for them to lend it in ...
Anthony Fallone's user avatar
0 votes
0 answers
49 views

How do Canadian banks manage their mortgage portfolio?

Firstly, I've read on CMHC website that only 30% of mortgages in Canada are securitized.50% of mortgages are on banks balanced sheet. And there is no reserve requirement in Canada (although there is ...
Laurent Tremblay Mompart's user avatar
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1 answer
63 views

Is there any graph that shows how the gold and silver content decreased in roman coins?

I am looking for a graph of at least a table with data that would allow me to make a graph, showing how the gold/silver content was slowly removed from roman coins due to debasement of the currency.
Ezekiel's user avatar
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0 votes
1 answer
13 views

Q question on the components of the $M_1$ component of money supply

The $M_1$ component of the money supply is given by the sum of the value of money held by the public+the demand deposits in the country + other deposits(money of other government institutions held by ...
math and physics forever's user avatar
0 votes
1 answer
132 views

Central bank balance sheets and money supply balances

I've compared the central bank balance sheets of many countries and I've found some numbers strange for me. The balance sheet of a central bank should include all the assets on one side and all the ...
SPS's user avatar
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0 votes
2 answers
145 views

Does printing more money necessarily lead to inflation?

Does printing more money necessarily lead to inflation? For instance, if the money supply increased, but the money just sat around and wasn’t distributed to people, would that still cause inflation? ...
Anthony Fallone's user avatar
0 votes
2 answers
106 views

Question about quantity theory of money

I have a question regarding the infographic above. It says demand for money rises when money supply is low and demand for money reduces when money supply is high. Why exactly is that the case? Why ...
Anthony Fallone's user avatar
0 votes
2 answers
182 views

Is it possible for the stock market to beat inflation forever?

Just a few thoughts on the possibility of markets beating inflation in the long, long term (say, hundreds of years). I am a theoretical physicist, not an economist, so please forgive my ignorance. I ...
doublefelix's user avatar
1 vote
2 answers
284 views

How does the central bank reduce money supply by selling bonds if the buyer of the bonds can use bonds as currency?

When the central bank wants to reduce the money supply, it can sell bonds. That way, the money supply reduces by the amount paid for the bonds. The buyer will have bonds instead of cash. The bonds can ...
Flux's user avatar
  • 553
0 votes
1 answer
38 views

How does debt-financed public infrastructure spending stimulate the economy if money supply is unchanged?

When a national government embarks on public infrastructure projects to stimulate the economy, the money spent on the infrastructure projects increases the money supply. However, if the projects are ...
Flux's user avatar
  • 553
0 votes
1 answer
31 views

GBP Currency Crisis - Forex supply and demand affecting exchange rates

Reading this article on Why China Buys US Treasury Bonds I understand the notion of supply and demand affecting a currency value against the other and how they need to buy up the excess dollars they ...
morleyc's user avatar
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1 vote
3 answers
762 views

How exactly do interest rates affect the money supply?

For context, here is the graphic that my question is based on: It says when interest rates are low, an employee paid 100 dollars will spend all 100 dollars, and when interest rates are high, an ...
Anthony Fallone's user avatar
1 vote
1 answer
63 views

How do Foreign Investments by Central Banks increase the Money Supply of an Economy?

Trying to understand if "money supply" and "currency in circulation" apply only to the money within the borders of the country or does it also include its money in foreign nations ...
Man Dem's user avatar
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1 vote
1 answer
50 views

Why the increase in bank loans is not reflected in increasing money supply?

In the US banking system, according to what I was able to understand, the way to increase the money supply (MS) is via commercial banks loans ( I suppose it includes loans to the government but in any ...
discipulus's user avatar
1 vote
1 answer
53 views

Where can we find M2 (or M1) data breakdown by wealth percentiles?

(this question refers to the US only) We have official data on M2 by the Fed, but, if I understand correctly, this M2 data includes even bank deposits of firms/corporations where I am after the ...
discipulus's user avatar
0 votes
0 answers
33 views

Why isn't the money demand function called the real money balances demand function?

M=Money supply P=Price k= How much money people wish to hold for each dollar of income = exogenous. Y = output M/P= real money balances Money demand function: (M/P)^d = kY Why isn't the money demand ...
povt's user avatar
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0 votes
0 answers
58 views

Question about the quantity theory of money

M = Money supply V = Velocity = Number of times the average bill changes hands in a time period. P = Price Y = Output T = Transactions Quantity equation M * V = P * Y, M * V = P * T Why do we have MV ...
povt's user avatar
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0 votes
0 answers
42 views

Question about money supply and the nominal interest rate

How does an increase in money supply, due to a decrease in the REPO rate, decrease the nominal interest rate? If an increase in money supply means more inflation, how doesn't inflation lead to ...
okman's user avatar
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1 vote
0 answers
96 views

What happens to Deposits when purchasing stock shares or money market fund shares?

I'm trying to understand the flow of money into the shadow banking sector, e.g. what happens when deposits are transferred to either a brokerage, or a money market mutual fund (MMMF), and specifically ...
Solaxun's user avatar
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1 vote
1 answer
45 views

Significance of yield spreads in highly liquid environment?

I've come across this chart from a few months ago and am unable to trace down its origins. But I would like to think I should be able to decipher it even without the authors whispering in my ear. So ...
Arash Howaida's user avatar
1 vote
2 answers
368 views

Loans create deposits, banks "are not reserve constrained"?

It is often said that banks are not "reserve constrained" when it comes to lending, and that loans create deposits (and therefore commercial banks create money). I have some doubts about the ...
Solaxun's user avatar
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