While ‘money printing’ is most associated with the U.S. right now, the world’s fastest emerging superpower is actually expanding its supply of currency at a far more rapid rate.
Even when adjusted for higher GDP growth, China leads U.S. money printing by a mile:
In China, M2 money growth was 61 per cent from January 2008 to June 2010. And M2 of the dollar grew at 14 per cent during the same period. Why should a currency appreciate when it is being printed in faster speed than another one? It is true that China’s GDP grew faster than the U.S. GDP.
But even after adjusting for GDP growth, the spread between M2 growth and GDP in China was 42 per cent, versus the spread of 19 per cent in US.
The chart above shows how US money printing has been pretty tame relative to China’s, when put in context of each nation’s economic size (GDP).