Money printing: what happens when countries print money

Money and prices across countries

The quantity theory of money says that when money grows much faster than the goods it can buy, prices make up the difference. A simple test: take every country with at least 20 years of both numbers in the World Bank's data — 151 countries, 1961 to 2025 — and average each one's yearly growth of broad money (cash plus bank deposits) and its yearly consumer inflation over the same years.

The dots fall along a line. The correlation is 0.96, and on the chart's log scale the fitted line has a slope of 0.98: each extra point of money growth came with about 0.98 points of extra inflation. Fastest of all: Brazil (money 99.0%, prices 83.1%), DR Congo (money 91.5%, prices 86.2%) and Angola (money 64.8%, prices 61.5%). The United States: money 7.3% a year, prices 3.8% (1961–2024). Most dots (149 of 151) sit below the dashed line, where prices rose more slowly than money — by a median 6.4 points a year — because growing economies need more money for more goods, and people tend to hold more money as they get richer.

Near the low end the link is loose. Among the 28 countries whose money grew less than 10% a year on average, the correlation is 0.54 (against 0.96 for the other 123), and their inflation ranged from 0.5% to 6.7%. At low rates, other forces — output growth, interest rates, how much cash people choose to hold — move prices as much as money does. The slowest money growth: Brunei (money 4.2%, prices 0.5%) and Antigua and Barbuda (money 4.9%, prices 2.2%).

The balloons: central banks after 2008 and 2020

Central banks create money by buying assets — mostly government bonds — and paying with new reserves, the deposits that commercial banks keep at the central bank. On a large scale this is called quantitative easing (QE), and a central bank's total assets are a good gauge of how much it has created. In 2007 the Federal Reserve held assets worth 6% of US GDP; after the rescues of 2008, three rounds of bond buying and then the pandemic, it reached 37% in 2021. The Eurosystem — the European Central Bank and the euro area's national central banks — went from 15% to 68% (2021).

Each balloon is one year's balance sheet as a share of that year's GDP: the higher and bigger, the more money the central bank had created. From 2007 to each one's peak: Federal Reserve ×6.0, Eurosystem (ECB) ×4.6, Bank of Canada ×7.2 and Reserve Bank of Australia ×3.5. All 4 have shrunk since their peaks, as the central banks let bonds mature without buying new ones (quantitative tightening). On November 4, 2026 the Fed's assets stood at $6.75T.

Where the money showed up: assets first

From August 2008 to March 2021 the Fed's balance sheet grew ×8.4. Consumer prices rose ×1.2 over those 13 years — 1.5% a year, close to the Fed's 2% goal. Asset prices moved much more: the S&P 500 ×3.1 and US home prices ×1.5 (both before inflation, the S&P without dividends).

Why did the money not reach the shops? Most of it stayed in the banking system as reserves, and much of the rest went into savings and markets rather than spending — the story of the case of the missing inflation. Consumer prices only woke up in April 2021, the first month after the pandemic began with inflation of 3% or more over twelve months.

2020: the printing press at full speed

In 2020 the US money stock M2 — cash plus checking, savings and money-market deposits — grew by $3.77T, +24.5% in a single year. Spread over the year's 366 days, that is $10.3B a day. The counter below runs at that pace from the moment you opened this page.

The press was not steady: April 2020 alone added $1.03T, more than M2 grew in any whole year from 1960 to 2019. And “printing money” is mostly a figure of speech: only 7% of 2020's new money was paper. The rest was keystrokes — deposits created when the Fed bought bonds, when the Treasury sent relief payments and when banks lent. For comparison, from September 2025 to September 2026 M2 grew by $3.46B a day.

Money first, prices later

M2 grew +26.8% in the year to February 2021, the fastest since the series began in 1959. At that point consumer prices were rising only +1.7% a year. Inflation came later: it peaked at +9.0% in June 2022, 16 months after the peak of money growth. Then the story ran backwards. M2 reached $21.8T in March 2022, +41% above February 2020, and then shrank to $20.7T by October 2023 (−4.9%). It stayed below its level of a year earlier for 15 months in a row, from December 2022 to February 2024 — the first such falls since the series began in 1959. By September 2026 it was back up to $23.4T, +51% above February 2020.

Slide the money line forward in time to see the lag. Since January 2015, money growth matches inflation best when it is shifted 18 months: the correlation rises from −0.17 with no shift to 0.71. Over the whole record since January 1960 the best shift is 24 months, and the match is weaker (0.42).

A correlation is not proof. Even at the best shift, money growth accounts for 50% of the swings in inflation since 2015 in the statistical sense (the square of the correlation), and other things moved at the same time: supply chains jammed, energy prices jumped in early 2022, and spending swung from services to goods. Before 2020 the best shift was 33 months and the correlation only 0.52. Money is a prime suspect, not a proven culprit.

The biggest printing sprees in the data

When a government pays its bills with new money for long enough, prices can run ahead of the money itself, because people rush to spend a currency they no longer trust. These are the 8 countries with the fastest one-year growth of broad money in the World Bank's data among the years that also have a consumer price figure, each in its record year; the bars show how many times money and prices multiplied. The full stories — and the cases these money figures miss — are in the hyperinflation article.

The most famous cases fall outside these figures: Germany in 1923 and Hungary in 1946 (the highest inflation ever recorded) came before the data begin, and the money figures miss Zimbabwe in 2008 and Venezuela in 2018–19. Each followed years of budgets paid for with new money.