Taps Coogan – April 15th, 2023

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The following chart, from JP Morgan via Acemaxx Analytics, highlights the significant divergence between US and Chinese M2 money supply growth, with the former in unprecedented contraction and the later accelerating.

The chart also highlights the wildly excessive monetary response to Covid in the US which easily surpassed that seen in the UK, Eurozone, Japan, or China.

It’s an age old question, but one has to wonder how long China will be able to hold its loose peg to the US dollar given the divergent money supply dynamics and total private/public debt to GDP that exceeds that of the US and is growing far more rapidly.