InBITCOINweTrust
On the way to becoming the world reserve currency?
Currency = Trust = BITCOIN!
Bitcoin is the only currency I know of that has a fixed stock of 21 million pieces
is limited according to the current state of the art. It also offers protection against interference by one or more central parties
The money supply M1, M2, M3 - What?
The terminology around money seems complicated, we try to explain it simply. We are often confronted with the so-called "money supply". This reflects how much money is currently in circulation. With all fiat currencies, more money is circulated over time.
Let's take a simplified look at the monetary denominations:
Money supply M1 = cash + deposits (e.g. bank balances)
Money supply M2 = M1 + term and savings deposits with a maximum term of 2 years
Money supply M3 = M2 + money market paper, investment fund deposits, bank bonds etc.
Source: https://www.kreditvergleich.net/statisticen/die-geldmenge-m1-m2-und-m3/
-------------------- Development of the money supply (M2) in the USA --------------------
In the euro area, we look at the M3 money supply. In recent years it has been growing at a rate similar to that of the money supply in the USA.
With the final decisive difference that one cannot really reduce the expansion of the money supply in the euro zone. Although the speed of expansion has been reduced since 2022, countries such as Italy and Greece are so overindebted that the ECB has to keep adding government bonds from these countries to its balance sheet.
On the other hand, good government bonds, such as those from Germany, are being reduced. What that means for the future of the euro zone remains open for the time being.
----------------------- Development of the money supply of the BITCOIN -----------------------
The amount of available Bitcoin is also constantly expanding - right!
But no need to worry:
While one does not know how much money will be issued in the next few years with fiat currencies, this is quite well regulated with Bitcoin.
There will be a maximum of 21,000,000 Bitcoin. The speed at which new bitcoins are found through mining is steadily decreasing. This means that the tasks for the miners to find a block are becoming more difficult.
The next halfing is expected to take place in 2024.
How is new money created?
More than 80 percent of the money is private bank money and that is created by the banks. Only the cash is issued by the central bank. So how can a bank create new money?
Quite simply: it grants loans! The bank simply credits the loan amount to the borrower's account. The central bank usually has a regulatory function. through the minimum reserve open. However, critics doubt that this reserve in the lower percentage range actually offers a good control option for the creation of new money. Source:Planet-Wissen.de
Increasing life on credit!
These are the debt clocks of the USA and Germany. Actually, both countries are bankrupt, like almost all other countries in the world. Because they spend more money than they earn. But by issuing government bonds they too can take advantage of the credit money system. The question is when this burden of debt will lead to the fact that loans can no longer be repaid. The example of Japan shows that this can take a long time. There, the national debt in 2021 is around 262% of GDP. Source:Statista.de
So you can see that this situation can be maintained for quite a long time. The private sector is also increasingly using the competitive advantage of credit money to gain a (growth) advantage over the competition. It will be exciting when the key interest rates are raised. Then the question quickly arises as to who can still service their interest burden and who is already doing so beyond their means that they can no longer service interest on loans.
We see expanding the money supply as common practice in any fiat currency. The USA is also the world reserve currency.
This means that many transactions such as commodity trading (oil, coal, etc.) are settled in US dollars. In addition, many countries are indebted in US dollars. This fact allows the US to create significantly more money than other economies. This has many advantages, but also some disadvantages. More about this here...
Since 2021, the USA has been trying to reduce the enormously increased money supply during the corona pandemic.
------------------- Development of the money supply (M3) in the euro area -------------------
