# Exceeding money supply

- Canonical URL: https://www.gerhardmerk.de/exceeding-money-supply
- Post ID: 592003
- Modified: 2023-07-25T21:02:02+00:00
- Language: en

## Definition

If a central bank increases the money supply with the aim of stimulating investment in the capital stock (as was the case in the U.S.A. between 1987 and 2001), market participants with a low inducement to invest will invest the cheap money on the stock market or in the real estate market. This leads to speculative bubbles. - Carry trades also ensure that loans taken out domestically at low interest rates are invested in higher interest-bearing accounts abroad. Therefore, a "cheap money policy" on the part of the central bank is economically disadvantageous; and the central bank's sole task should be to preserve the measure property of money. - See bubble, speculative, carry trades, three-year tender, money, cheap, money squeeze, housing bubble, money inflation, inflation, crisis, central bank-induced, Larghezza, negative interest rate, low interest rate policy, zero interest rate, quantitative easing, interest rate stimulus, interest rate differential, interest rate, kept low. Attention: The financial encyclopedia is protected by copyright and may only be used for private purposes without express consent! University Professor Dr. Gerhard Merk, Dipl.rer.pol., Dipl.rer.oec. Professor Dr. Eckehard Krah, Dipl.rer.pol. E-mail address: info@ekrah.com https://de.wikipedia.org/wiki/Gerhard_Ernst_Merk https://www.jung-stilling-gesellschaft.de/merk/ https://www.gerhardmerk.de/

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