Zim’s M2 exploding, Hanke

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Renowned American economic analyst Professor Steve Hanke says Zimbabwe’s money supply (M2) is exploding at 467/ year.

 

“Zimbabwe’s money supply (M2) is EXPLODING at ~467%/yr.

 

“That’s OVER 64x Hanke’s Golden Growth Rate range of 5.7-8.7%/yr, a rate consistent with hitting ZIM’s inflation target of 2-5%/yr.

 

“It’s no surprise that ZIM’s inflation is SKY HIGH at 657%/yr by my measure,” he says.

 

Apparently, M2 is the sum total of all of the currency and other liquid assets in a country’s economy on the date measured.

 

The money supply includes all cash in circulation and all bank deposits that the account holder can easily convert to cash.

Governments issue paper currency and coins through their central banks or treasuries, or a combination of both. In order to keep the economy stable, banking regulators increase or reduce the available money supply through policy changes and regulatory decisions.

 

Meanwhile, excessive growth in M2 if not matched by increased production and real economic activity (Zim’s case), can lead to inflationary pressures and financial instability.

 

Central banks and monetary authorities closely monitor M2 money supply as part of their monetary policy framework.

 

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