Australia Money Supply

Discussion in 'Currencies' started by leo25, Sep 7, 2019.

  1. leo25

    leo25 Well-Known Member Silver Stacker

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  2. Oddjob

    Oddjob Well-Known Member Silver Stacker

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    WTF !................Looks like a topic John Adams and Martin North should delve into .

    I do hope it's a mistake, otherwise the RBA and Govt have a bit of explaining to do.

    Great pick up @leo25
     
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  3. willrocks

    willrocks Well-Known Member Silver Stacker

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    Looks like an error. If not, hyperinflation is coming.
     
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  4. Oddjob

    Oddjob Well-Known Member Silver Stacker

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    I think the RBA has changed their definition of what's in M1. Refer link.

    https://www.rba.gov.au/search/?q=m1+money+supply#gsc.tab=0&gsc.q=m1 money supply&gsc.sort=date

    and notes from RBA web site. Regardless, I think the RBA is playing silly buggers with words.
    ---------------------------------------------------------------------------------------------------------------------------------------------------------

    D3 Monetary Aggregates
    Financial aggregates are compiled by the RBA using data primarily supplied by authorised deposit-taking institutions (ADIs) and non-ADIs. The data for the levels of financial aggregates in Tables D2 and D3 are not adjusted for series breaks. The growth rates published in Table D1 are adjusted for these breaks, and accordingly are a better measure than growth rates calculated from this table.
    Historical levels and growth rates for the financial aggregates are often revised owing to the resubmission of data by some financial intermediaries, the re-estimation of seasonal factors and the incorporation of securitisation data. The RBA credit aggregates measure credit provided by financial institutions operating domestically. They do not capture cross-border or non-intermediated lending.
    From July 2019, the financial aggregates are compiled using an improved conceptual framework and a new data collection. This is referred to as the Economic and Financial Statistics Collection. Various movements from the June 2019 to July 2019 reporting periods are sizable, in part because the new data collection more consistently classifies loans according to their purpose. For more information, see Updates to Australia’s Financial Aggregates (available here <https://www.rba.gov.au/publications...dates-to-australias-financial-aggregates.html>).
    ‘Currency’ comprises holdings of notes and coins by the private non-bank sector.
    ‘Transaction deposits with ADIs’ is defined as total transaction deposits at ADIs from the private non-ADI sector.
    ‘M1’ is defined as ‘Currency’ plus ‘Transaction deposits with ADIs’ (prior to July 2019, M1 was defined as ‘Currency’ plus only a portion of transaction deposits; the new definition brings M1 more in line with international reporting standards). From July 2019, the new framework for M1 was revised to April 2002 using historical data. Historical data are not available prior to April 2002, and so a conceptual level break in the series occurs at this period.
    The sum of currency and transaction deposits does not add exactly to M1, which is due to a small portion of currency which is estimated to be held by non-residents and/or the government (these sectors are not included in the monetary aggregates). This estimate is based on those sectors’ relative shares of transaction deposits in all transaction deposits.
    ‘M3’ is defined as ‘M1’ plus all other deposits at ADIs (including negotiable certificates of deposits) from the private non-ADI sector.
    ‘Broad money’ is defined as ‘M3’ plus ‘Other borrowings from private sector by AFIs’.
    ‘Money base’ is defined as holdings of notes and coins by the private sector plus deposits of banks with the Reserve Bank and other Reserve Bank liabilities to the private non-bank sector.
     
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  5. leo25

    leo25 Well-Known Member Silver Stacker

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    Thanks for that @Oddjob looks like the RBA is just moving the yard sticks again. I guess anything other then M0 is just guess work.

    Looks like the M1 was starting to drop before the change which shows credit contraction, not a good economic sign.
     
    Last edited: Sep 7, 2019
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  6. Alfie

    Alfie Active Member

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    Thanks for the heads up Oddjob, I'll do a thorough search (using the search tool next time) before starting a thread again(didn't notice the currency section, scanning the first 3 pages of Current Affairs isnt good enough), my bad
    I was just checking up on my definitions of M0, M1, M2 etc when I happened across https://tradingeconomics.com/australia/money-supply-m1
    That's a massive jump in M1 supply in one month 282%!
    I also came across this "M0 supply is currently 113.7 Billion Dollars" (found in link above)
    And this https://australia.financialadvisory.com/biggest-banks-by-deposits-australia-2016.html
    A quick rough calculation of all the deposits in Ozzy banks as at 2016 was AUD $1,815,500,000 (1.8 Trillion) or about 6% of M0 and around 50% of M1
    A run on the banks would soon educate the masses on what fiat is and what its backed by
     
  7. leo25

    leo25 Well-Known Member Silver Stacker

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    I always wonder how accurate these reporting are. But anywho, that's a massive increase in base money. Who ever said an increase in CB reserves doesn't mean an increase in bank money? (or vice versa) Or did they once again redefine what the call base money?


    bank_CB.jpg
     
    Last edited: Sep 28, 2021
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  8. mmm....shiney!

    mmm....shiney! Administrator Staff Member Silver Stacker

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    Privately issued money is backed by the federal government on a 1for1 basis. Runs are confined to the history books.
     
  9. mmm....shiney!

    mmm....shiney! Administrator Staff Member Silver Stacker

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    I wouldn't worry too much about the accuracy, I can't see much value in tracking the growth of base money when the banks are only interested in creating new money for mortgages and corporations.

    [​IMG]

    [​IMG]
     
  10. Alfie

    Alfie Active Member

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    I'm a bit confused here
    Privately issued money, do you mean
    1) Physical notes printed by the Reserve Bank?
    2) Money created by banks at interest?

    How does money being backed 1 for 1 stop this?
    I ran a quick search for bank runs and it seems they still happen
     
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  11. mmm....shiney!

    mmm....shiney! Administrator Staff Member Silver Stacker

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    (b) money created by the banks.

    I bet you'll find that those bank runs occurred in tinpot countries with trashed economies ie governments with little capacity to back the money being issued. It won't happen in modern, developed economies.
     
    Last edited: Sep 28, 2021
  12. leo25

    leo25 Well-Known Member Silver Stacker

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    AUS money 2021.jpg
     
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  13. alor

    alor Well-Known Member Silver Stacker

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    continue on with bigger and bigger budget deficits
     

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