Loose money supply is a result of the Federal government's implementation of loose monetary policy.
Monetary policy
involves changing the amount of money in circulation in order to affect
interest rates.
A loose monetary policy is implemented to encourage economic growth by increasing credit and lowering its costs.
Under the loose monetary policy, inflation increases. Borrowing is easy thus consumers buy more and businesses expand. More people are employed and because they know have higher purchasing power, they spend more.
