Concerns Arise as M2 Growth Exceeds GDP Growth in Major Economies

Data shows that since January 2004, the growth rate of the broad money supply (M2) in major developed economies has significantly exceeded the nominal GDP growth. The specific data is as follows: Canada M2 growth is 368%, nominal GDP growth is 159%; the U.S. M2 growth is 279%, GDP growth is 171%; France M2 growth is 258%, GDP growth is 84%; the Eurozone M2 growth is 211%, GDP growth is 102%; Japan M2 growth is 90%, GDP growth is 25%. Analysts believe that the low interest rates, quantitative easing, and large-scale fiscal stimulus from 2020 to 2021 over the past 20 years have driven a continuous expansion of global liquidity. Central banks have increased money supply, governments have expanded deficits, and bank credit has expanded, collectively creating a long-term environment of excess money. Some economists point out that the decline in the velocity of money circulation and the flow of funds into financial asset markets have caused excess liquidity to manifest more in rising asset prices rather than directly pushing up consumer prices. However, in the long term, the continued growth of money supply exceeding economic output may lead to asset inflation, currency depreciation, or future consumer inflation pressures. Japan is seen as an extreme case, with significant growth in money supply but long-term low GDP growth and persistently low inflation levels; while Canada shows a strong correlation between monetary expansion and real estate boom, along with rising household leverage.