base money: summary tables

2019.05.22 Overall Table.png

methodology explained

The government fiat base money supplies in the above table are sourced from the top-30 floating currencies in the world. These currencies represent roughly 95% of the global economy. Sixteen of the 30 currencies in this table have money stock data stretching back to the early 1970s. The analysis begins on 31 December 1969, both to cover the full decade of the 1970s, but more importantly because the Bretton Woods system fully collapsed in the early 1970s, and gold became completely severed from the US-dollar, thus losing its legal “reserve” or “base money” status. From 15 August 1971, gold lost any (already waning) legal quality as a “reserve currency,” and government fiat currencies essentially became “their own thing.” There was no further claim or IOU on any government fiat currency from this point, government fiat became completely “irredeemable,” and henceforward government fiat currencies became another form of “base money” in the world.

An important point to note is that, economically, though the US-dollar is not the world’s “reserve currency” anymore (nor “backed” by gold), it still does retain a role as the “global unit of account.” All central banks will have, first and foremost, the exchange rate that their own currency commands with the USD, listed prominently on their own website, as well as in a historical time series. Some central banks, interestingly, will even fetch “black market” rates with the US-dollar. In any event, the world today demands a unit of comparison when comparing and contrasting different base money supplies, and that unit of account is both practically and prominently the US-dollar, in the global market. For the moment, and until Bitcoin is “larger” in value than the global monetary base in dollar terms, that global unit of account is not Bitcoin.

Regarding the currencies that are analyzed, we are defining a “floating” currency as any monetary regime that is not a currency board nor conventional peg, according to the IMF. It is important to use only floating currencies in this base money analysis, because that is precisely what defines something as “base money”—it must not be redeemable for anything else, it must represent final settlement. In today’s monetary world, only floating currencies fit this bill. A small amount of nations, such as Panama, don’t even issue their own currency (they simply use the US-dollar), so their economic areas don’t factor in either (or, more accurately, their nation is already included under the economic impact of one of the floating currencies). You can see what monetary regime the IMF assigns to each nation’s currency in the third column in the table above. This is updated once per year.

Regarding the base money supplies, this typically means a central bank’s cash banknotes and coin that are minted and outstanding, plus the commercial bank reserves at the central bank. Some central banks, like the Bank of Japan, include both their nation’s total banknotes and coin on their balance sheet. Some central banks, like the US Federal Reserve, include only banknotes. The St. Louis branch of the Federal Reserve adjusts for this, and publishes a separate, headline monetary base inflation series, which includes all the cash banknotes and coin in the United States. We do use that adjusted series here. But typically, we are reporting only what each central bank defines as its own monetary base, on its own balance sheet. In a few cases, where the supply of coins is readily available but also not already included in the central bank’s balance sheet, we do add the value of their currency’s coins into the calculation. Other than this, no adjustments are made.

Regarding inflation rates, it’s important to understand that all monetary inflation rates reported in the above table are compounded, annualized rates. These rates have nothing to do with general or consumer price inflation (an impossible metric to calculate). These inflation rates we calculate only measure the rate of change in the money stock; otherwise known as the money growth rate, or money production rate. To arrive at our headline, blended, “global fiat” inflation rate, we do apply a weighting scale. This scale is dynamic and changes every month, based on the US-dollar weight of each currency’s monetary base value, as a proportion of the total. In this sense, the USD market exchange rate does come into play in our analysis, but only with regard to this headline inflation rate number. One then realizes with a cursory glance that the top four base money supplies in the world (USD, EUR, CNY, & JPY) thus easily clear 80% of this global fiat inflation rate’s weight. In early decades, where a fiat base money supply and its growth rate’s data were unavailable, it simply didn’t factor into the global weight for that period.

As we are only including the top-30 floating currencies for the moment, you will notice that “newsworthy” inflationary currencies like those in Venezuela, Belarus, or Zimbabwe aren’t included. However, as the US-dollar relative value of their base money supplies are so small anyway, they would push the weight of our headline, global inflation numbers very little, if at all. However, there are two prominent economies over the last 50 years whose floating currencies do factor into the top-30 and who have gone through many bouts of monetary hyperinflation—the (many) currencies of Brazil and Argentina. This leads into how we calculate the compounded annual growth rates of each money supply. As mentioned, we are calculating all money growth rates on a monthly frequency. This is precisely to deal with failed and rebooted currency regimes like those in Brazil and Argentina.

Let’s start, however, looking at an overall, compounded growth rate figure for a currency that “has made it” over 50 years. One such currency is the US-dollar. We could simply look at the USD’s monetary base 50 years ago as its present value (PV), and take the monetary base of the USD today as its future value (FV), and then solve for the annual rate, based on how many years have passed. This would give us the compounded, annualized growth rate for the dollar over 50 years, and we could also derive doubling time from this figure. This method will not work, however, for those nations who have gone through multiple, different currencies in the last 50 years, such as Brazil and Argentina. So in order to handle their situations, and track the all-time inflation rates that the citizens of those economies “have felt,” on a long-term basis, we need to look at monthly growth rates. Brazil, for example, has had six different currencies since 1969 alone. So how to make that PV/FV calculation that we did for the US-dollar and then solve for the rate? We cannot. The solution is to measure all of the monthly growth rates over 50 years, average them, and then simply ignore the 6 different times (months) when the central bank of Brazil introduced a new currency unit (and basically slashed zeroes) into the economy. Ignoring those six months where the currency was reset, we can still measure and compare the monetary inflation that Brazil has dealt with across the decades. Then, once we have calculated that monthly average growth rate (over 50 years, or however long of a period we want to measure), we arrive at a compounded, annualized growth rate by taking 1 plus the monthly average rate, raising that figure to the 12th exponent, and then subtracting 1.

This method is applied to all currencies in calculating their compounded, annualized monetary inflation rates. The table above then summarizes three different time periods—compounding the last month, the last 12 months, and however many months since the central bank published its monetary base data. The next column, doubling time, is derived from the overall (since begin date) compound growth rate column. That is the most meaningful figure in terms of doubling time, as one can then say, for example, “In the United States, since 1969, the base money stock has doubled approximately every 8 years.”

Unlike other visuals on this site, which update daily; the above table is updated (at least) once per quarter.


base money: supply curves


base money: supply growth (inflation)


Source: Central Banks, Nick Laird, CoinMarketCap, Coin Metrics, Blockchain