The money supply growth in major global economies far exceeds economic growth, raising concerns about structural risks from prolonged monetary expansion.

BlockBeats News, July 25 — Data shows that since January 2004, the broad money supply (M2) growth rate in major developed economies has significantly outpaced nominal GDP growth:

Canada: M2 increased by 368%, nominal GDP increased by 159%

United States: M2 increased by 279%, GDP increased by 171%

France: M2 increased by 258%, GDP increased by 84%

Eurozone: M2 increased by 211%, GDP increased by 102%

Japan: M2 increased by 90%, GDP increased by 25%

Analysis suggests that the past 20 years of low interest rates, quantitative easing, and the large-scale fiscal stimulus from 2020 to 2021 have driven a continuous expansion of global liquidity. Central bank monetary expansion, increased government deficits, and credit expansion by banks have together created a long-term excess money environment.

Some economists believe that due to a decline in velocity of money and a significant flow of funds into financial asset markets, the excess liquidity is more reflected in the rise of asset prices rather than directly driving up consumer prices. However, in the long run, money growth persistently surpassing economic output may bring asset inflation, currency depreciation, or future consumer inflation pressures.

Among these, Japan is considered an extreme example: a sharp increase in money supply but long-term low GDP growth and persistently low inflation; Canada, on the other hand, represents the opposite end, where monetary expansion is highly correlated with booming real estate and rising household leverage.