Inflation, Investing and Everything
The latest available Singapore M3 money supply growth figures are in, and the year-on-year M3 growth rate is a whopping 23.62% (June 2007 compared to June 2006). The GDP growth in Q2 2007 was 8.6%, and assuming we take gov.sg's word for that, this means that the total money supply is expanding at a rate of 23.62 / 8.6 = 2.7 times faster than the rate of expansion of the total economy of goods and services.
Monetary inflation is due to the rate of growth of the money supply being greater than the rate of growth of available goods and services in the economy, so this is highly inflationary.
The list below shows M3 growth rates in recent months (click here for the historical M3 growth figures dating back to Jun 2004) :
Note how it has stayed above 20% for each and every month this year, so far. Also note how it really picked up pace in May 2006 where it jumped above 10%, and then the next acceleration happened from Jan 2007 where it jumped above 20%.
We're looking in the rear-view mirror here, so the figures due to the Aug stock market crash aren't in yet. Will have to check back in a couple of months to see what effect that had on the money supply.
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