Permalink, Australian M3 Money Supply, cam, 242 words, 1 comment, M3, Reserve Bank of Australia, Inflation

The M3 is a wider view of the amount of money value in the economy that can be can be used to pay debt. Inflation can mean that there is a surplus of money in the economy and the historical change in the M3 might be the first place to look for those pressures. IANAE.

The are four measures of money supply in the economy;

• M0: All physical currency
• M1: The M0 plus in demand accounts.
• M2: The M1 plus savings accounts, money market accounts.
• M3: The M2 plus all CDs (over 100,000) and repurchase agreements.

The RBA has statistical and historical sheets for the M1 and M3 series. Judging by the M3 sheet, the Australian M3 includes;

• Currency
• Current deposits with banks
• Other deposits with banks (Certificates, term, other)
• Deposits with non-bank
• Non-deposit borrowings from private
• Broad money

IANAE, but it appears there is more money supply in 2004 than in 1980. I don't know how it can be determined from that graph that there is more money than there is demand which can cause inflation.

The above graph is the components of the M3 money supply broken out and graphed since 2000. It appears broad money and deposits with non-banks have increased more than the other components during that period. I do not know what that means in relation to inflation though.

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