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Australian Money Supply Inflates At Alarming Rates

Australian money supply has inflated at alarming rates post Covid decaying most of Australian's wealth. There was only one asset class that beat the rate of inflation over these years.

The Australian Money Supply M1 comprises physical currency and demand deposits, representing the most liquid forms of money readily available for transactions. It excludes less liquid assets like term deposits. Central banks monitor M1 to gauge immediate liquidity in the economy, guiding monetary policy decisions accordingly.

Australia adhered to the gold standard until 1931, pegging its currency to the British pound, which was also backed by gold until the British government abandoned the gold standard in the same year.

The Reserve Bank of Australia commenced operations on the 14th of January 1960. From 1960 to 1975, Australia held approximately $8.269 billion AUD in money reserves (M1) as it broke away from the British pound in 1966. Australians embarked on a new currency journey with their native Australian Dollar.

Australian M1 Money Supply


From 1975 to 1990, the Australian money supply had increased to $43.51bil, or 419.74%, an average of $2.3 billion, or 7.7% per annum, reflects the consequence of adopting an unbacked currency. This flexibility allows for significant adjustments.

The US abandoned the gold standard in 1971, allowing for unrestricted money printing as the world's reserve currency. Consequently, other countries were compelled to follow suit, leading to an escalation of uncontrollable debt. Starting from 1990, it begins to exponentially accelerate.

From 1990 to 2016, Australia printed $700 billion dollars, marking a 1,644% increase over 26 years, or an average inflation rate of 7.17% annually. (To real estate owners: your property may have increased over time, but only at the rate of inflation. Here is the evidence. If property doubles in value every 10 years, so does the money supply).

From 2016 to 2024, the entire M1 supply doubled to $1.67 trillion. It took 40 years to reach $700 billion, but only 5 years to double it and then some, increasing by 2.3 times.

Bitcoin has been the only asset class to not only beat, but perform at multples of this obsurd money value diltuions. From 2016 to 2014, Bitcoin's price is up 10,613%, or an average gain 28.4% every year.

Bitcoin returns year on year



Another interesting finding was the migration / student visa numbers.

One incredible aspect of Australia is its multiculturalism. We are enriched by a diverse array of foods, cultures, and ideologies from around the world. Immigration is vital, offering people a chance at a better life, and we embrace it. However, we prioritize sustainability in our approach to immigration.

Australia's immigration estimate was approximately 600,000 from Jun 2021 to June 2023, increasing Australia's population by 2.6%, and a further 375,000 expected from June 2023 to June 2024.

australian immigration



Australia's GDP per person is $66,300 on avg. What does this mean?

Each person in Australia is expected to generate $66,300 of goods and/or services for the country per annum.

If a person is generating less than the average, they would contribute less economic value to the country. Conversely, if they are generating more than the average, the country advances economically each year as a result.

If we mulitply 700,000 (immigrants) x $66,000 (GDP) = $46.2 bil

In this time, Australia has increased the M1 money supply by $50 bil

Has the RBA backed their most recent currency move by immigration?

Australian Money Supply

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References:
https://tradingeconomics.com/australia/money-supply-m1
Australian Population
Australian Immigration
Australian Immigration Expectation

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