23% : Singapore M3 money supply growth rate

Just stumbled across this one. From gov.sg's own publications, I have found out that Singapore's annual M3 money supply growth rate is in the neighbourhood of 23% (!!)

More precisely, if we take the Mar 2007 M3 monetary aggregate (SGD $286,781.9 million dollars sloshing around in various forms), and the same figure as at Mar 2006 (SGD $233,590.3 million), and do a (286,781.9 - 233,590.3) / 233,590.3 x 100%, we get 22.77%.

This is a HUGE figure. This is even higher than the USA's 12% M3 growth rate, which I have already been yelling about. It's on par with China's 20+% figures.

Folks, this is the root cause and key explanation behind ALL the stock market records, property price records and price inflation going on over here. And when (that's "when", not "if") M3 falters due to any reason whatsoever, it's "watch out below!"

Personally, this means that if your total portfolio did not gain 23% in the last year, you lose! And also, if you did not achieve a 23% salary increment in the past year, you lose! It's as simple as that (at least, from a contrarian point of view).

23% is the new figure to beat. Have fun.

Updates (and more fun facts) :

1. At 0.25%, the interest rate you get on your ordinary savings accounts at the bank is now almost 100 times less than the M3 growth rate.

2. At 2% or so, the interest rate you get on your fixed deposits is about 10 times less than the M3 growth rate.

3. Reactions from friends and colleagues : one said that government is the cause of inflation, direct and indirect. I replied, let's make it simpler : government is the root cause of ALL inflation.

4. Another pointed out that I am now technically in the RED. He is correct. As of last weekend, my portfolio has been chugging along at an 11.92% annualized rate. That is 10.85 percentage points behind 22.77%. That's right, it's a huge gap. My portfolio has to work harder. Yes, that makes it look like the goal posts have been moved. Again.

5. Peter Schiff, CEO and Chief Global Strategist of Euro Pacific Capital, has recently written an article in which he notes that :

... the larger issue is whether the world's renewed love affair with stock investing is rational. From my perspective it certainly is, but not for the reasons most analysts believe. My guess is that common stocks have become the inflation hedge of choice. With the global growth in the money supply at record pace, reaching into annual double-digit growth in just about every nation, cash has indeed become trash. With so much cash sloshing around, pushing asset and commodity prices up everywhere they are accurately measured, preservation of purchasing power is now of primary concern. For most investors common stocks seem like the best way to achieve it.

(2007-05-28 10:41:56 SGT) [Biz] Permalink Comments [1]

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