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question for the experts...
from the first article, where he says...
"Money supply growth has been buoyant in recent months. Offering almost 14 per cent growth in August, money supply is expanding at a rate that would make even the most laid-back central banker feel distinctly squeamish. ",
does he mean cash in the bank is devaluing at 14% annually based upon the equivalent growth in the supply of money ?
Milan. -
I'm by no means an expert on this but I'll have a go...
In a nutshell - no! Cash in the bank devalues by the rate of inflation (assuming no interest is paid). An increase in the money supply may or may not result in rising inflation depending on whether it results in increased demand outstripping supply.Originally posted by milanbenes
One of the points being made in the article is that despite there being an increase in the money supply, this does not appear to be resulting in increased demand.Comment
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Dabbling in Economics again, eh, Milan. Stick to changing tapes, there's a good boy - we've already determined that it's beyond you...Hard Brexit now!
#prayfornodealComment
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great reply Sas,
ok jokes aside, what do you make of this information ?
Milan.Comment
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That no one knows WTF is going on as the traditional "laws" of economics relied on certain assumptions that no longer apply due to globalisation in markets and labour.Originally posted by milanbenes
HTHHard Brexit now!
#prayfornodealComment
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In a nutshell: It depends.Originally posted by Gonzo
M4 has outstripped inflation / repo rate / anything you care to name for a number of years now - it's asset price (as opposed to goods + services) inflation. Now why asset inlation is supposedly 'good' and the other inflation 'bad', I don't know.
It astounds me that inflating the money supply above interest rates, never mind 14%, doesn't set off big red flashing lights. But then, I'm not a central banker.
Something will go bang at some point fairly soon.Comment
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Thats what I like, a succinct answerOriginally posted by bobhope
Science isn't about why, it's about why not. You ask: why is so much of our science dangerous? I say: why not marry safe science if you love it so much. In fact, why not invent a special safety door that won't hit you in the butt on the way out, because you are fired. - Cave JohnsonComment
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Sas,
notwithstanding that you take the p too much,
that answer/summary,
'That no one knows WTF is going on as the traditional "laws" of economics relied on certain assumptions that no longer apply due to globalisation in markets and labour.',
is excellent
Milan.Comment
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I believe that thinking the BoE setting interest rates is independent of the government is not quite what it seems. The government set the rate of inflation through their preferred "independent" source: the ONS.
From the Torygraph
Sir John pointed to "real anger" within the ONS that official numbers are "often challenged by ministers", using analysis from government departments.
"The ONS should be run strictly as an office of the House of Commons, with no requirement for figures to be 'checked' by the Government," he said.
He said that recent Treasury proposals to make the ONS independent, while retaining statisticians elsewhere in Whitehall, "amounted to a half-way house".
Sir John added: "Even if it was run in an independent way, its independence would never be believed. One would always be looking for Treasury levers under the table."
Within the ONS, said Sir John, "professional people feel their work is being subverted. That is very worrying for our democracy".If you think my attitude stinks, you should smell my fingers.Comment
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