The Great Print: What the Data Shows About Money Printing in the West

The story people tell about “money printing”

In the years after Covid, one phrase kept showing up in charts, podcasts and memes: “they printed more money than ever before”. Screenshots of vertical money supply charts circulated alongside claims that 20–40 per cent of all dollars were created in just a couple of years.

Those charts were not entirely wrong. In the United States, broad money growth (M2) did reach record peacetime levels in 2020–21, and other advanced economies also experienced unusually strong expansions in their money aggregates. But the story is more complicated than “central banks printed and everything went up”.

This article looks at what actually happened to money supply in five Western economies during the Covid period – the United States, the euro area, the United Kingdom, Australia and Canada – how that fed into the high inflation that followed, and why the costs have fallen especially heavily on younger generations.

What economists actually mean by money and “printing”

Before we can talk about “printing”, we need to be precise about what counts as money. Economists and central banks use different aggregates to describe different layers of the monetary system.

Base money, broad money and bank deposits

At the core is base money – banknotes and coins in circulation, plus the reserve balances that commercial banks hold at the central bank. This is the part central banks can create directly with their own balance sheets.

Most of the money people actually use, however, is broad money: the deposits in bank accounts and closely related instruments such as some money market funds. Aggregates like M2 (in the US) and M3 (in the euro area) track this broader concept. When a bank makes a new loan, it typically creates a matching new deposit – expanding broad money even if the number of physical banknotes does not change.

QE, fiscal stimulus and bank lending working together

The public debate usually lumps three quite different mechanisms under “money printing”:

• Quantitative easing (QE) – central banks buy government or private bonds, paying for them by crediting banks’ reserve accounts. This expands base money and the central bank’s balance sheet, but broad money only rises directly if the sellers are non-banks who receive new deposits.
• Fiscal deficits funded by bond issuance – governments run very large deficits, issuing bonds that are bought by private investors or by central banks under QE. When those funds are spent into the economy – wage subsidies, transfers, support schemes – they typically arrive in household and business bank accounts, boosting deposits and therefore broad money.
• Commercial bank lending – during a recovery, banks extend more credit to households and firms, which mechanically creates new deposits. This can sustain broad money growth even after emergency fiscal measures wind down.

In the Covid shock, all three were active at once. Central banks launched large-scale asset purchase programs. Governments ran the biggest peacetime deficits in decades. And once lockdowns eased, private lending began to grow again. Together, these forces produced a one-off jump in money supply that is visible in every advanced economy chart.

The Covid money surge in the US, Europe, the UK, Australia and Canada

The details differ by country, but one pattern is common: broad money grew much faster in 2020–21 than in the decade before. Central bank balance sheets also expanded dramatically as QE programs scaled up.

A once-in-a-generation jump in broad money

In the United States, the Federal Reserve’s preferred broad money measure, M2, grew at around 24–27 per cent year-on-year at its peak in 2020–21, compared with typical pre-Covid growth of 5–7 per cent. The euro area’s M3 aggregate grew by roughly 8–10 per cent in the same period – far above norms for a currency union used to low inflation.

The Bank of England’s balance sheet grew as its Asset Purchase Facility holdings rose towards £895 billion, while UK broad money and household deposits also jumped. Australia and Canada, which had not previously used QE at scale, launched their own bond purchase programs in 2020. The Reserve Bank of Australia ultimately bought around A$281 billion of government bonds, and Australian broad money measures such as M3 reached record levels. The Bank of Canada likewise implemented large government bond purchases to support market functioning and monetary stimulus.

The chart below uses an illustrative index of broad money (2015 = 100) to highlight the shape of the Covid-era surge across these five economies. The dataset is educational rather than official, but is loosely calibrated to the pattern seen in public data from central banks and statistical agencies.

Illustrative indices of broad money in five advanced economies, scaled to 2015 = 100. Actual data can be obtained from sources such as FRED, the ECB’s Statistical Data Warehouse, the Bank of England, the Reserve Bank of Australia and the Bank of Canada.

Comparing QE and money growth across countries

The next table summarises, in simplified form, how strong peak broad money growth was and how large central bank asset purchases were relative to GDP in each economy. The numbers are rounded and illustrative but capture the broad orders of magnitude discussed in central bank and BIS reports.

From money surge to the high inflation that followed

The spike in broad money during 2020–21 was followed by the highest inflation episode in many advanced economies since the 1980s. In the OECD as a whole, headline inflation reached around 10 per cent in late 2022 before gradually easing. The timing supports the idea that excess liquidity and strong nominal demand played a role, but it is only part of the story.

Supply shocks – especially to energy and food – were also crucial. Work by organisations such as the OECD and IMF shows that surging energy and food prices accounted for a large share of the initial inflation spike, particularly in Europe, while re-opening frictions and tight labour markets added pressure in services. Monetary and fiscal expansions helped households and firms survive the immediate crisis, but they also amplified demand at a time when supply was constrained.

How high inflation hit younger generations

High inflation does not hit every household equally. International research finds that lower-income households and renters have been among the worst affected, because they spend a larger share of their budgets on energy, food and rent – the very categories that rose fastest.

Younger adults are disproportionately represented in these groups. In Australia, for example, the Reserve Bank notes that renting is most common among people aged 25–44, and renters experience higher rates of “rent stress” when housing and interest costs rise. Surveys during the cost-of-living crisis report that more than three-quarters of Generation Z Australians face money worries, with many younger households struggling to pay bills or rent on time.

Similar patterns appear elsewhere. In the United Kingdom, recent analysis shows that renters under 45 now pay about two-thirds of the country’s total rent bill, and their aggregate rent payments rose sharply in just a couple of years as landlords passed higher mortgage costs on to tenants. Studies of the distributional impact of inflation find that real purchasing power losses of several percentage points in 2022 fell most heavily on poorer and younger households with less savings and less capacity to adjust their spending patterns.

In other words, the combination of the Covid money surge, supply shocks and the eventual rise in interest rates has translated into a sustained squeeze on younger generations: higher rents, higher childcare and education costs, higher food and energy bills, and higher debt servicing for those trying to buy a first home. Older asset-owning households, by contrast, have often benefited from earlier property and asset price gains and may carry less leverage.

After the Great Print: QT, higher rates and the long tail

Once inflation began to run well above target, central banks pivoted from emergency stimulus to tightening. Policy rates were raised quickly, and several central banks moved from QE to quantitative tightening (QT) – allowing bonds to mature without reinvestment or actively selling assets. This shrinks central bank balance sheets over time and slows the growth of base money.

Broad money growth has slowed sharply or even turned negative in some measures, and inflation rates have come down from their peaks. But the legacy of the Great Print is still with us in several ways:

• Governments carry higher public debt loads and face higher interest bills, limiting fiscal space for future shocks.
• Asset prices and housing costs that rose in the low-rate period have not fully reversed, keeping entry costs high for younger and lower-wealth households.
• Real wages and living standards for many younger families have been eroded by several years of prices running ahead of pay, even as unemployment stays low.

The initial goal of avoiding a depression was achieved, but the costs have been distributed unevenly across age and income groups.

How to think about “too much money” without the hype

It is tempting to look at a single money supply chart and draw a straight line to inflation, asset prices and generational outcomes. The reality is that the Great Print was the product of overlapping decisions: emergency QE, massive fiscal support, private credit expansion and later, aggressive tightening.

The data suggest three balanced takeaways:

• The Covid period really did see a historically large jump in broad money and central bank balance sheets in the West – the charts are not fake.
• This monetary and fiscal expansion contributed to the subsequent inflation, but interacted with severe supply shocks rather than acting alone.
• The inflationary aftermath has hit younger, lower-wealth and renting households hardest, largely through housing, energy, food and childcare costs – turning a macro policy story into a generational one.

Understanding those links clearly is more useful than either denying the scale of the money surge or assuming that every price rise can be blamed on a single line on a central bank balance sheet.

Related PLEX reading

References & further reading

• Federal Reserve Bank of St. Louis – M2 Money Stock (Discontinued)
  Long-run US broad money data used in many money supply charts.
• Banque de France – The increase in the money supply during the Covid crisis
  Analyses US and euro-area money growth and its drivers in 2020–21.
• BIS – Central bank asset purchases in response to the Covid-19 crisis
  Cross-country review of QE programs and balance-sheet expansion.
• Brookings – What did the Fed do in response to the COVID-19 crisis?
  Accessible overview of US monetary policy actions during the pandemic.
• Reserve Bank of Australia – Review of the Bond Purchase Program
  Official review of Australia’s QE program and its estimated effects.
• Bank of England – Quantitative easing
  Explainer on what QE is and how it works in practice.
• Bank of Canada – Understanding quantitative easing
  Updated explainer on QE and its role in the Covid response.
• OECD – A cost-of-living squeeze? Distributional implications of rising inflation
  Examines how recent inflation episodes have hit different income and household groups.