Thursday, Jul 17, 2008
Monetarism is making a comeback
UK house bubble: waiting in vain for deflation
Some old-style monetarism from Alice Cook. US monetary growth is still surprisingly high, despite the credit crunch.
Posted by inflationwatch @ 02:56 AM (283 views) Add Comment
1 Comment
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1. paul said...
I keep banging on about how the Bank of England has full control over inflation, only to be met with muted agreeement.
She says just that though:
"Monetary growth is important. With a lag of about 18 months, monetary growth numbers are rather good predictors of inflation."
That's the problem. the Bank of England let M3 Money supply rip and then treats the subsequent inflation like it is in act of god which isn't their fault but which they have to deal with.
If you want to know why inflation keeps going up, have a look at a graph of the recent growth of the UK money supply:
http://en.wikipedia.org/wiki/Money_supply#United_Kingdom