I took all the charts that I have posted in pieces, and placed them in one chart. I believe this is the longest chart on the internet.
I went down the list of countries by nominal GDP, according to the IMF. This list does not include North Korea, Cuba, and Somalia, as well as a few other islands. These countries do not publish money supply data.
The first thing people usually notice about this data is how low the U.S. Dollar has actually been expanded. Most brush it off in disbelief, saying that M3 is not reported, so there is no way of knowing. I should talk about the methodology.
The money supply is divided into a few categories. M0 is notes and coins that we actually carry. M1 is M0 plus demand deposits (money that you can take out of the bank at any time). M2 is M1 plus time deposits (money that can only be taken out after a certain time.) M3 includes M2 plus large time deposits and domestic currency held abroad or foreign currency held in-country. The research above was done using M2.
M3 could have been used, but there is a problem with both including it and excluding it. By excluding it, the total increase in the money supply of each country has not been fully captured, so the numbers above should actually be higher. However, if M3 was used as the metric, each number would have also included foreign currency, so the money supply of some countries would have been expanding at a higher rate, but through no fault of the domestic central bank. Liberia, for example, relies on U.S. Dollars for about half of its money supply.
The other problem with using M3 is that U.S. Dollars would have been double counted, in some cases. A U.S. Dollar that is held in Mongolia would have been counted as both U.S. M3 and Mongolian M3, so the calculated monetary inflation rate would have been pushed higher than it actually is.
Some of the percentage increases in the chart above reflect M3. It depends what each country’s central bank, or an IMF report, disclosed as M2 or M3. If they were not clear, I just used the largest number.
Even though the outline I used above for M0, M1, M2, and M3 are the general guidelines, every central bank uses a slightly different definition. The World Bank, for instance, has data on the M2 of almost every country. However, those numbers include foreign currency held domestically, so it should actually be titled M3. The Bank of England said “Screw it,” and decided they were only going to report M0 and M4, which is a category they made up. My point is that not all currency data is compatible.
Two countries are not on the list: Zimbabwe and Bermuda. Zimbabwe is the Charlie Sheen of monetary inflation. Bermuda’s data is way too low, and the World Bank does not have any data for them, so I have no way of checking.
The important lesson to take away from this is that most of the world has inflated its domestic money supply by more than 100% over the last five years.