Australia and money supply growth

sorry for noob question but whats broad money and also where do you get these figures?
cheers
 
It's important to note that broad money growth doesn't directly correspond to price inflation. So just because we have 8% broad money growth doesn't mean that even an accurate CPI index would show 8% inflation.

Some say that a rough gauge on CPI growth will be Broad Money minus GDP growth. I want to study this concept a lot more in depth and see the merit to it. Maybe that can be my PHD paper lol.
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Playing catch-up here:

Over the month of May, M3 grew by 1.6 per cent and broad money grew by 1.4 per cent. Over the year to May, broad money grew by 7.7 per cent.

Over the month of June, M3 grew by 0.6 per cent and broad money grew by 0.6 per cent. Over the year to June, broad money grew by 8.6 per cent.

Big jump in May!
 
Fykus said:
sorry for noob question but whats broad money and also where do you get these figures?
cheers
Click to expand...

2nd... where did you get these figures. i have the RBA site on my favourites but have not seen these stats..

help

1for1
 
as long as the fiscal pygmy-swan gets his surplus, doesnt matter how much more we print :rolleyes:
 
Over the month of July, M3 grew by 0.7 per cent and broad money grew by 0.6 per cent. Over the year to July, broad money grew by 8.4 per cent.
 
rbaggio said:
Over the month of July, M3 grew by 0.7 per cent and broad money grew by 0.6 per cent. Over the year to July, broad money grew by 8.4 per cent.
Click to expand...
in 7 months 8.4 ? or over the last 12 months. By the way that sounds like a lot; how much is it average over the last 50 years so we could compare?
 
Argentum said:
rbaggio said:
Over the month of July, M3 grew by 0.7 per cent and broad money grew by 0.6 per cent. Over the year to July, broad money grew by 8.4 per cent.
Click to expand...
in 7 months 8.4 ? or over the last 12 months. By the way that sounds like a lot; how much is it average over the last 50 years so we could compare?
Click to expand...

My Excel skills aren't the best, but here you go.

Broad Money stats only go back so far, so here are M3 and Broad Money stats since they started keeping score.

In $ billions.

478_m3.png


478_broad_money.png
 
thanks rbaggio, so can it then be assummed that gold or anything else for that matter should go up in price that much if we dont consider supply/demand
 
Argentum said:
thanks rbaggio, so can it then be assummed that gold or anything else for that matter should go up in price that much if we dont consider supply/demand
Click to expand...

I will tell you this. When we were pegged to the US dollar, and the US dollar was pegged to gold, our money supply growth was not out of control.

July 1959 <-- start of RBA M3 stats
M3: $6.7 billion

August 1971 <-- Nixon closed the gold window
M3: $16.1 billion

Our M3 went up 2.4x times in 12 years.

Now look at the following equal length of time.

September 1983
M3: $88.1 billion

Our M3 went up 4.8x times in the next 12 years.
 
rbaggio said:
Argentum said:
thanks rbaggio, so can it then be assummed that gold or anything else for that matter should go up in price that much if we dont consider supply/demand
Click to expand...

I will tell you this. When we were pegged to the US dollar, and the US dollar was pegged to gold, our money supply growth was not out of control.

July 1959 <-- start of RBA M3 stats
M3: $6.7 billion

August 1971 <-- Nixon closed the gold window
M3: $16.1 billion

Our M3 went up 2.4x times in 12 years.

Now look at the following equal length of time.

September 1983
M3: $88.1 billion

Our M3 went up 4.8x times in the next 12 years.
Click to expand...

And it looks like the money supply increases throughout that early period were discrete events, in 1959, 1965 and 1969. Then from 1972 it just becomes a continuous fountain of money spewing. The impact of closing the gold window is obvious on that chart, from conservative descrete events (possibly related to economic expansion, I'm guessing) to continuously printing money, turning everyone from savers to speculators/gamblers seeking alpha returns beyond the rate of currency depreciation.
 
Is one reason our money supply is increasing due to foreign currency speculation? Maybe they needed more to satisfy the demand.

Unsure of the exact logistics though, whether it is money printing or expansion through debt.

If that's the case, we're in for a sad time if the AUD falls out of favour (inflation)
 
Dogmatix said:
Is one reason our money supply is increasing due to foreign currency speculation? Maybe they needed more to satisfy the demand.
Click to expand...

Nah they don't print AUD to satisfy investors.

If people start buying up AUD in a big way, then the value of AUD goes up relative to other currencies. So 1 AUD buys more USD/Euro/whatever than it used to. Australian imports become cheaper (Plasma TV's!!!1!!1!one), Australian exports become less attractive.

If they AUD goes out of favour with investors, then the opposite to the above happens.
 
I would have thought so too - but isn't the AUD like the 4th or 5th highest traded currency?

Maybe some of these speculators 'borrow' AUD in order to speculate?

I'm grasping at straws here, trying to understand why broad money grew so much.
 
Debt has been expanding.

From wikipedia:

M1: currency bank + current deposits of the private non-bank sector
M3: M1 + all other bank deposits of the private non-bank sector
Broad Money: M3 + borrowings from the private sector by NBFIs, less the latter's holdings of currency and bank deposits
Money Base: holdings of notes and coins by the private sector plus deposits of banks with the Reserve Bank of Australia (RBA) and other RBA liabilities to the private non-bank sector
 
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