Monetary debasement is the rate at which the global stock of money is expanding relative to real goods, services, and assets. It is not the same thing as price inflation. Consumer prices are subject to heavy statistical management (substitution effects, hedonic adjustments, basket reweighting), all of which compress the headline. Monetary debasement can be measured directly from central bank balance sheets and monetary aggregates, without those adjustments.
This index combines three channels of money creation: broad money growth (M2/M3/M4 across the major monetary blocs), central bank balance sheet expansion, and government deficits. Each channel captures a distinct mechanism; the composite weights them to form a single readable number. Aggregation uses GDP-share weights, which is the analytically appropriate basis for asking how fast money is growing relative to the real economy it denominates.
Twenty years of data makes one thing plain: assets with limited supply have broadly kept pace with debasement, while assets priced off the policy rate have not. Equities, gold, and property grow scarce relative to money. Bonds and cash are money, which is the problem. What follows puts a number on that gap and shows where the world currently sits.
Total broad money across the six major monetary blocs, converted to USD at spot exchange rates and indexed to March 2006 = 100. Year-on-year growth is aggregated using GDP-share weights.
Strip out real GDP growth and what remains is genuine excess money creation. Quantity theory: %ΔP ≈ %ΔM + %ΔV − %ΔY. The real lens isolates the %ΔM − %ΔY term.
It answers the quantity-theory objection. The standard critique of any debasement index is that nominal money growth is meaningless without netting real output. The real lens handles that directly. The 20-year average sits around 4%; strip the COVID surge out and the structural reading is closer to 3%.
It reframes recent history. The 2023–2024 period saw nominal money growth barely above zero, but with real GDP running 2–3%, the real lens shows conditions were contractionary for two straight years, the first time that has happened in the modern era.
It does not replace the nominal headline. Asset prices are priced in dollars. The relevant benchmark for whether an equity index keeps pace with money creation is the nominal rate. The real lens is the analytical check underneath the index.
M2 captures one source of money creation. Central bank asset purchases and government deficits add two more. Adjust the framework weights and see the composite respond.
The same global money stock, denominated in gold ounces. Gold grows at ~1.5% per year through mining, has no issuer, no liability counterparty. When this line falls, fiat money is losing ground to the one monetary asset no central bank controls.
Rolling 36-month correlations between GMDI headline and three major asset classes. Where the relationships hold tells you when the framework has traction. Where they break is equally important.
Through most of the 2006–2026 period, risk assets moved with global liquidity at correlations of 0.7 to 0.95. But in 2022, the framework failed spectacularly: liquidity readings were still elevated coming out of the COVID surge, yet stocks, bonds, gold, and Bitcoin all fell together. The deeper lesson: this framework is necessary but not sufficient. Monetary debasement explains why asset prices grind higher over decade-plus horizons; it does not explain twelve-month periods when real-rate dynamics dominate.
The GMDI Plus is classified into three regimes, and historical asset returns are computed for each. The result converts the index from a measurement tool into something with direct allocation implications.
In Loose regimes, the practical direction is clear: reduce cash and bond exposure, increase equities and real assets. The historical record supports it. Gold has averaged double-digit returns in these periods. Equities have run well above their long-run averages. Bitcoin has been several multiples of its all-period average, though its behaviour within any twelve-month window is unreliable enough to warrant separate treatment.
Tight regimes are short, bond-friendly, and easy to miss. The framework has only registered Tight readings during genuine deflationary scares: the GFC aftermath, 2015, and the 2023–2024 QT period. These windows are brief, but bonds outperform equities meaningfully within them. Getting the inflection right matters more than anything that happens inside the regime.
The current reading sits in Loose territory. The Fed ended QT in December 2025, fiscal deficits remain structurally elevated, and broad money has been reaccelerating across blocs. Historically, Loose regimes run 2–4 years once established.
The return any asset must clear to preserve real purchasing power. Asset returns shown are 12-month nominal to May 2026.
Gold, S&P 500, Bitcoin: computed from pipeline data. ASX 200, AU bond, cash: manually sourced.
The winners share a structural property. Limited supply combined with monetary sensitivity. Gold and large-cap equities, particularly US technology, qualify on both counts. The losers are either pure yield instruments priced off the policy rate, or assets running their own cycle disconnected from liquidity conditions at this moment.
Property is absent from the table but belongs in the same category. It is a real asset with limited supply and monetary sensitivity, excluded here for a data reason rather than a conceptual one: building comparable cross-jurisdictional monthly residential price series with the same granularity as financial assets is genuinely difficult. Over the same twenty-year period, residential property in most of these economies has broadly tracked or exceeded the debasement rate. That is what you would expect from an asset with these structural properties.
Bonds are the most consequential loser. A 4.5% Australian 10-year yield against a ~10.8% Australian hurdle locks in roughly 6.3% of annual real loss for anyone holding to maturity. For institutions required to hold fixed income (super funds, insurance balance sheets) this is not a temporary inconvenience. The honest framing is not "what is the yield" but "how much real loss am I accepting in exchange for liquidity and balance sheet stability."
Bitcoin's current underperformance is asset-specific, not a framework failure. A Loose monetary regime should, on historical pattern, be supportive for Bitcoin, but it is losing to the hurdle by a wide margin. The late-2025 peak and subsequent drawdown reflect its own cycle, independent of global liquidity at this time horizon. Bitcoin's relationship with GMDI is strong over multi-year windows and unreliable inside twelve months.
Attribution of the current GMDI Plus reading by source layer and by monetary bloc.
Take three policy inputs and return the implied GMDI Plus twelve months out.
Component-level view of each monetary bloc: broad money measure, USD value, YoY growth, central bank balance sheet, fiscal deficit, and GDP weight.
| Bloc | Measure | Local (T) | USD (T) | M2 YoY | CB BS (T) | Deficit | GDP wt | Stock wt |
|---|---|---|---|---|---|---|---|---|
| United StatesUSD | M2 | 22.7 | 22.7 | 4.8% | 6.7 | 5.8% | 38.0% | 21.0% |
| ChinaCNY | M2 | 353.9 | 51.8 | 8.5% | 6.3 | 5.0% | 25.0% | 48.0% |
| EurozoneEUR | M2 | 16.3 | 17.6 | 3.4% | 6.7 | 3.2% | 22.0% | 16.3% |
| JapanJPY | M2 | 1,280 | 10.4 | 1.7% | 5.4 | 4.5% | 6.0% | 9.6% |
| United KingdomGBP | M4ex | 3.21 | 3.4 | 4.5% | 0.9 | 4.4% | 5.0% | 3.1% |
| AustraliaAUD | M3 | 3.3 | 2.1 | 7.7% | 0.4 | 1.5% | 4.0% | 1.9% |
| Aggregate | — | — | 108.0 | 5.3% / 6.0% | 26.4 | 4.5% | 100% | 100% |
5.3% is the GDP-weighted headline; 6.0% is the stock-weighted alternative.
Every component is sourced from publicly available data. The pipeline runs monthly, pulling the latest observations from each source and regenerating this page automatically.
The bottom line in plain language.
Over twenty years, the monetary system has run a slow, structural transfer from fixed-value assets toward assets with limited supply. It does this at 4.3% per year in real terms, quietly, and it compounds. Holding cash and investment-grade bonds across this period did not preserve purchasing power. It was a slow loss, accepted in exchange for safety and liquidity.
The index does not tell you what to buy next month. What it does show, with reasonable confidence over multi-year horizons, is the direction of the monetary wind and which category of assets has historically moved with it. In a Loose regime, where the world sits today, that category has been equities, gold, and real assets including property. Bonds and cash have been the structural losers.
The 2022 breakdown earns its own section because it matters: inflation expectations and real rate dynamics overwhelmed the money-supply effect that year, and almost everything fell together. That is a genuine limitation and worth keeping front of mind. But the twenty-year record is not ambiguous. The assets that kept pace share identifiable structural properties. The ones that did not are held for reasons other than purchasing-power preservation.
Use this index for what it is: a long-duration lens on the monetary environment, not a trading signal. The question it answers is not what markets will do this year. It is whether your portfolio is aligned with how the monetary system actually works.