Money Supply, Economic Growth, and the Quantity Theory of Money

In the early modern era the European money stock grew rapidly. ¹ Part of the growth has been explained by a larger supply of metals usable as coin or bullion. ² More gold and more silver were produced, especially in South America, and much of this output was minted in Europe or for use in Europe. Part of the growth, indeed an increasing part of it, can be explained by a growing supply of other means of payment. Governments, merchants, and others produced a variety of paper supplements for coin. While the stock of money did not grow in the same way throughout Europe, all the continent shared in the phenomenon of an enlarged money supply.