Monday 7 July 2014

Stock of debt-free money expands – shock.




I pointed out here that the stock of base money (aka debt-free money, aka vertical money, aka high powered money) has risen dramatically in the US as a result of QE.
Advocates of full reserve banking want base money to be the only form of money, while opponents of full reserve claim that that means the end of civilisation as we know it.
It now seems that that rise in the stock of base money relative to GDP is a worldwide phenomenon – see chart below (and hat tip to Cigolo by the way). Contrary to the predictions of the opponents of full reserve, the sky has not fallen in as a result.


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