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libspero

Growth In Key Money Supply Gauge Slows

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Reuters UK

4th August 2009

By David Milliken and Mike Peacock

Annual growth in a key component of money supply slowed to its weakest since 1999 in the second quarter, Bank of England data showed on Tuesday, just two days before the central bank decides whether to expand its quantitative easing programme.

M4 broad money supply growth, excluding holdings of intermediate other financial corporations, slowed to an annual rate of 3.1 percent in the second quarter of 2009 from a downwardly revised 3.8 percent in the first quarter.

"It still shows that money growth is weak up to and including the second quarter," said Philip Shaw, economist at Investec.

"If I was a policymaker, I wouldn't take too much comfort from the quarterly trend, and look at the overall slowdown. The conclusion is that QE isn't boosting money growth, though it's early to be making a judgement," he said.

These are a couple of choice extracts (emphasis my own), full article available HERE

Apologies if already posted, I couldn't find it and this seems important.

The article its self is very interesting, but the part that surprised me is that monetary growth of 3.1% is officially considered weak.. even though we target currency devaluation of 2% as a national policy.

Perhaps others can enlighten me as to why this abhorrent contradiction of logic makes rational sense.

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Guest DissipatedYouthIsValuable

Indebted populace fails to see logic of borrowing more money to reduce debts.

What a shock.

Edited by DissipatedYouthIsValuable

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Of course they're mulling over more QE, who is going to buy their worthless bonds?

I've said all along it will never stop, the demented actions are locked in.

Edited by punter

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Of course they're mulling over more QE, who is going to buy their worthless bonds?

I've said all along it will never stop, the demented actions are locked in.

:lol:

I like that phrase.

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Guest DissipatedYouthIsValuable
There is a split in the MPC, apparently, but we'll see more QE shortly. That's a given.

Something for the grandchildren to look forward to paying.

Sumerian style debt jubilee or public issued interest free currency/social credit would surely be better?

Edited by DissipatedYouthIsValuable

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It certainly seems a bit like that

There is a split in the MPC, apparently, but we'll see more QE shortly. That's a given.

I think that you are probably right.. perhaps if M4 was negative or 0.5% I could understand it, but 3% sounds like a healthy level of growth to me.

Because M4 has been touching 10% over the last few years, it seems we are taking this as a normal rather than unhealthy level of credit expansion. Either I simply understand nothing, or we are scrambling to get back to overheated/unstable credit expansion as quickly as possible, not by accident but as a matter of monetary policy. Why?!

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It certainly seems a bit like that

I think that you are probably right.. perhaps if M4 was negative or 0.5% I could understand it, but 3% sounds like a healthy level of growth to me.

Because M4 has been touching 10% over the last few years, it seems we are taking this as a normal rather than unhealthy level of credit expansion. Either I simply understand nothing, or we are scrambling to get back to overheated/unstable credit expansion as quickly as possible, not by accident but as a matter of monetary policy. Why?!

Presumably they feel that 1930's type levels of unemployment would not be condusive to the voters giving them another term in office.

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There is a split in the MPC, apparently, but we'll see more QE shortly. That's a given.

Only another $50 Billion. How did they decide on that number? A throw of the dice. What next month - hey, howz about doubling that just to be sure HPI goes through the roof again. :ph34r:

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