Money -- M1 and M2 -- in Japan and the USA, 1992-2009
Jan. 7, 2010
Here is Japan's M1 and M2 record, 1992-2009. M2 is the better indicator of future consumer prices in Japan than M1 is.
M1 is more important than M2 or MZM as a forecasting tool for consumer prices in the United States. For evidence, click here. In Japan, M2 is by far the more accurate tool for forecasting consumer prices.
As you can see, M1 inflation in the United States was much higher than in Japan in the first half of the 1990s. It was lower in the second half. This parallels the respective moves in the adjusted monetary bases. For evidence, click here.
What about M2 in the United States?
For M1, there was not much difference, 1992-2008. The timing was different. The aggregates were not. Central bank policies were comparable.
For M2 in the United States, the increase was much higher than for M2 in Japan. M2's rate of increase/decrease in the United States was comparable to M1's rate of increase/decrease in Japan.
M1 in Japan and M2 in the United States were comparable in their rates of increase/decrease.
Conclusion: no radical differences. The timing differed.