Global money supply tops $142T, signalling fresh liquidity wave

Global money supply hits $142T, liquidity rises World’s Money Is More Than $142,000,000,000,000: The Trickle-Up Zone Something is brewing in the global economy (left). The financial heart of the world is pumping more strongly than ever. By September the world’s money supply hit a record $142 trillion, climbing 6.7% year over year a phenomenon without precedent. This surge, […]

Global money supply hits $142T, liquidity rises

World’s Money Is More Than $142,000,000,000,000: The Trickle-Up Zone Something is brewing in the global economy (left).

The financial heart of the world is pumping more strongly than ever. By September the world’s money supply hit a record $142 trillion, climbing 6.7% year over year a phenomenon without precedent. This surge, propelled for the most part by China, the European Union and the United States itself, suggests that central banks are once again letting loose after cycle after cycle of tightening. In other words, the days of easy money may be returning and markets are already responding. The Liquidity Wave Returns

Following almost two years of quantitative tightening (QT), central banks are reversing course. The New York Fed’s John Williams suggested recently that asset purchases might not be resumed until bank reserves are “ample.” In Fed-speak, that’s a definitive nod toward the next Quantitative Easing (QE) cycle perhaps as soon as 2026. Investors understand what that means: When liquidity rebounds, risk assets surge. The last time the money printer ran hot during the pandemic in 2020 global asset prices soared. In the wake of a pandemic that has left governments around the world already weakened and heavily indebted, central banks are once more being asked to maintain liquidity.

Defining the Money Supply, To understand why this matters, let’s first clarify what we mean by “money supply.” Economists have measures like M2 that incorporate cash, checking deposits and other highly liquid assets. As M2 rises, so does the amount of cold hard cash that is woodenly moving through the economy to promote spending, investing and plain old speculation. Think of it as the bloodstream of the world’s financial system and at this moment, it is pumping furiously.

The Big Three: Driving the Surge

That $142 trillion figure isn’t evenly distributed around the world. It is dominated by the “Big Three” China, the EU and the U.S.

China by itself has around $47 trillion in broad money, growing rapidly to prop up its property market and keep the wheels of industrial output turning. Officially, the European Union is committed to controlling inflation but it continues to supply abundant credit throughout its member nations.

The United States paves the way, as always. Every suggestion of a shift toward easing from the Fed has global liquidity models rippling. Together, they are like synchronized pumps that ensure the global financial system never runs too dry even when policymakers talk tough about austerity. It’s a Game-Changer That $142 Trillion Is the Estimated Cost of Quitting Fossil Fuels