Jump to content
House Price Crash Forum
Sign in to follow this  
Ash4781

M4 Money Supply July

Recommended Posts

http://www.businessweek.com/news/2010-08-19/u-k-money-supply-growth-weakest-since-1983-as-lending-slows.html

Aug. 19 (Bloomberg) -- U.K. money supply grew at the slowest pace since at least 1983 and bank lending contracted for a ninth month, suggesting a credit squeeze may be becoming more entrenched, Bank of England data showed.M4, the broadest measure of money supply, expanded 2.3 percent in July from a year earlier. That?s the lowest rate since monthly date started. The number of mortgage loans granted by a six-bank lending panel fell to 47,000 from 48,000 in June, a 14-month low. Loans to small and medium sized businesses contracted 2 percent on the year.

I missed this release and the thread. Real rates for savers are negative and wages are also not rising wih inflation. presumably the lenders will still be wanter higher margins while people and co's try to pay down debt. Oh dear

Share this post


Link to post
Share on other sites

http://www.businessweek.com/news/2010-08-19/u-k-money-supply-growth-weakest-since-1983-as-lending-slows.html

I missed this release and the thread. Real rates for savers are negative and wages are also not rising wih inflation. presumably the lenders will still be wanter higher margins while people and co's try to pay down debt. Oh dear

A-ha! So inflation is down to somewhere near that 2% target.

Just a shame it was up in double digits for all those bubble-years. :angry:

Share this post


Link to post
Share on other sites

A-ha! So inflation is down to somewhere near that 2% target.

Just a shame it was up in double digits for all those bubble-years. :angry:

lol, I don't think that there's an exact correlation between money supply growth and inflation. The cereal I normally buy has just gone up by 6.5%, don't Tescos know that the M4 measure has only increased by 2.3%?

Share this post


Link to post
Share on other sites

lol, I don't think that there's an exact correlation between money supply growth and inflation. The cereal I normally buy has just gone up by 6.5%, don't Tescos know that the M4 measure has only increased by 2.3%?

I think it just depends on whether you are talking about inflation of the money supply (M4) or inflation in the price of goods (CPI/RPI).

Share this post


Link to post
Share on other sites

I think it just depends on whether you are talking about inflation of the credit supply (M4) or inflation in the price of goods (CPI/RPI).

Fixed.

Share this post


Link to post
Share on other sites

I think it just depends on whether you are talking about inflation of the money supply in the UK economy (M4) or inflation in the price of goods in chinese industrial exports, as moderated by exchange rates (CPI/RPI).

Fixed for you.

Share this post


Link to post
Share on other sites

lol, I don't think that there's an exact correlation between money supply growth and inflation. The cereal I normally buy has just gone up by 6.5%, don't Tescos know that the M4 measure has only increased by 2.3%?

Makes sense. There are two effects there: fluctuations in prices of individual goods (which work both ways), and underlying inflation (which takes time to feed through into retail/consumer prices).

Inflation from the first half of the noughties has yet to work its way through the economy, so expect more rises in the shops.

Share this post


Link to post
Share on other sites

Makes sense. There are two effects there: fluctuations in prices of individual goods (which work both ways), and underlying inflation (which takes time to feed through into retail/consumer prices).

Inflation from the first half of the noughties has yet to work its way through the economy, so expect more rises in the shops.

Unfortuntely it's not as simple as that. Money supply has constantly grown over the past decade yet prices havn't always followed, just take a look at the FTSE 100 for example. At it's peak it nearly hit 7000 and that was way back in 2000, money supply growth has told us nothing about what the FTSE would so from there on in. It's the same with prices in the shops.

Edited by Chef

Share this post


Link to post
Share on other sites

lol, I don't think that there's an exact correlation between money supply growth and inflation. The cereal I normally buy has just gone up by 6.5%, don't Tescos know that the M4 measure has only increased by 2.3%?

Broadly speaking (excuse pun), they correlate. Hotairmail linked a paper last year by Mervy King, with some graphs showing such. The price indexes just tend to respond more quickly in the short term (which is why they use them for setting rates - supposedly, closer to the sharp end of the action), but over 18-24 months, the broad money supply (credit supply) is the dominant force.

Just think about it though: how else would you get sustained price index inflation, without either printing up more money or extending more credit?

Edited by Traktion

Share this post


Link to post
Share on other sites

So not only price inflation (as evidenced by CPI and RPIx) but even a confirmed M4 money supply increase - all at a time when we are supposedly facing an unprecedented deflationary holocaust <_<

Unless there has been a more than matching increase in the supply of goods and services - rather unlikely right now as I think everyone would agree - then so much for deflation. Meanwhile, the fed is getting ready to print even more trillions and there are rumours of even more QE to come in the UK. To 'fight the deflation' of course, and not at all to try to monetise the debt that the banks and the nations can't pay back ... :rolleyes:

Share this post


Link to post
Share on other sites

Broadly speaking (excuse pun), they correlate. Hotairmail linked a paper last year by Mervy King, with some graphs showing such. The price indexes just tend to respond more quickly in the short term (which is why they use them for setting rates - supposedly, closer to the sharp end of the action), but over 18-24 months, the broad money supply (credit supply) is the dominant force.

Just think about it though: how else would you get sustained price index inflation, without either printing up more money or extending more credit?

I don't think that there's enough evidence to say that a change in X means a corresponding change in Y, the equation is too complicated and the data is flawed (imo). I don't know what the ONS are measuring and how thorough they are with their collection techniques, so I can't be sure that CPI/RPI is an accurate reflection of what is really going on in the high street.

It's probably the other way around anyway, workers expect a yearly raise in wages and that feeds back into prices. So people end up paying more for the goods and services they buy which means more £'s are needed from the banking system. How do you know that it's the money supply that is increasing first? It might just be a reaction to a previous increase in prices caused by higher fixed costs.

It's all a lot of nonsense imo that just gives more jobs to state bean counters, what's the point in measuring the price of carrots when they won't even tell us how much our land is worth or who owns it? It's totally back to front thinking which is designed to lead individuals up dead ends.

Edited by Chef

Share this post


Link to post
Share on other sites

I don't think that there's enough evidence to say that a change in X means a corresponding change in Y, the equation is to complicated and the data is flawed (imo). I don't know what the ONS are measuring and how thorough they are with their collection techniques so I can'y be sure that CPI/RPI is an accurate reflection of what is really going on in the high street.

It's probably the other way around anyway, workers expect a yearly raise in wages and that feeds back into prices. So people end up paying more for the goods and services that they buy which means more £'s are needed from the banking system. How do you know that it's the money supply that is increasing first? It might just be a reaction to a previous increase in prices.

It's all a lot on nonsense imo that just gives more jobs to state bean counters, what's the point in measuring the price of carrots when they won't even tell us how much our land is worth or who owns it? It's totally back to front thinking which is designed to lead individuals up dead ends.

it's really simple.

Banks create credit - promise people money.

Eventually they ask for it, as which point is' printed up. Inflation lags credit expansion. This is a genius design because it makes it very hard for most to charge anything like the correct interest rate for the risk, and allows the bankers the ability to raise prices in only a few key areas so they can socially engineer things in their own interests and then cope with the general inflation later on.

Share this post


Link to post
Share on other sites

it's really simple.

Banks create credit - promise people money.

Eventually they ask for it, as which point is' printed up. Inflation lags credit expansion. This is a genius design because it makes it very hard for most to charge anything like the correct interest rate for the risk, and allows the bankers the ability to raise prices in only a few key areas so they can socially engineer things in their own interests and then cope with the general inflation later on.

The banks can only do whatever it is their customers ask them to do. If their customers ask for money to spend on property and the banks see that in the current market the house is worth X then they'll lend them the cash.

They're not socially engineering anything, they're reacting (just like everyone else) to the abusive state of the land market. The fiscal solution is out of their hands.

Share this post


Link to post
Share on other sites

The banks can only do whatever it is their customers ask them to do. If their customers ask for money to spend on property and the banks see that in the current market the house is worth X then they'll lend them the cash.

They're not socially engineering anything, they're reacting (just like everyone else) to the abusive state of the land market. The fiscal solution is out of their hands.

In a healthy market, that lending would push interest rates up (as a simple matter of supply-and-demand), thus reaching a new equilibrium. Excess money supply (sorry, credit supply - pace Injin) together with implied government guarantees and perverse incentives, created a substantial deviation from a healthy market - a bubble.

Part of the problem is to have anyone set interest rates 'nationally'. The market should set rates, and anyone tying their rates to someone else's (e.g. to BoE base rate) should be investigated for anti-competitive practices, just as they would if they found evidence Tesburysons were price-fixing.

Edited by porca misèria

Share this post


Link to post
Share on other sites

In a healthy market, that lending would push interest rates up (as a simple matter of supply-and-demand), thus reaching a new equilibrium. Excess money supply (sorry, credit supply - pace Injin) together with implied government guarantees and perverse incentives, created a substantial deviation from a healthy market - a bubble.

Part of the problem is to have anyone set interest rates 'nationally'. The market should set rates, and anyone tying their rates to someone else's (e.g. to BoE base rate) should be investigated for anti-competitive practices, just as they would if they found evidence Tesburysons were price-fixing.

A true libertarian would allow individuals to collude to fix prices, I don't know whether you'd class yourself in that category but I try and be consistent with these things whenever possible.

It's addressed in standard economic literature; in a free market if companies fix prices so they're artificially high it encourages either competition or a breaking the arrangement in order to maximise market share. The more companies in the cartel the more unstable it is.

But whichever way the money supply isn't the source of the problem; it's the ability of the owners of land to charge other people rent. The ability to extract payment from workers without providing any additional service in return attracts a high price, so all economic activity tailors itself around this perverse and abusive state of affairs. Perhaps the competition commission could investige this anti-competitive practice?

Edited by Chef

Share this post


Link to post
Share on other sites

The banks can only do whatever it is their customers ask them to do. If their customers ask for money to spend on property and the banks see that in the current market the house is worth X then they'll lend them the cash.

The banks can also refuse to do what their customers want them to do, or offer easier terms on the things that the bankers would like them to do.

They're not socially engineering anything, they're reacting (just like everyone else) to the abusive state of the land market. The fiscal solution is out of their hands.

No, they socially engineer all the time. The housing bubble was a result of VI bankers trying to expand the property owning democracy as a buffer to the coming statist fiscal problems. This is a matter of record in the US senate and elsewhere.

Edited by Injin

Share this post


Link to post
Share on other sites

A true libertarian would allow individuals to collude to fix prices, I don't know whether you'd class yourself in that category but I try and be consistent with these things whenever possible.

It's addressed in standard economic literature; in a free market if companies fix prices so they're artificially high it encourages either competition or a breaking the arrangement in order to maximise market share. The more companies in the cartel the more unstable it is.

But whichever way the money supply isn't the source of the problem; it's the ability of the owners of land to charge other people rent. The ability to extract payment from workers without providing any additional service in return attracts a high price, so all economic activity tailors itself around this perverse and abusive state of affairs. Perhaps the competition commission could investige this anti-competitive practice?

In a free market, there are no companies.

Just individuals.

The money supply and the banking system isn't the entirety of the problem, it's a large part of it.

You also present a false dichotomy. It's not "land market bad, banking system good" it's "land market shit, banking system shit."

Share this post


Link to post
Share on other sites

The banks can also refuse to do what their customers want them to do, or offer easier terms on the things that the bankers would like them to do.

This isn't workable alternative, if there's demand for banking then free market theory says that eventually that demand will be met (if there's money to be made). Marxists have been waiting for decades for the masses to suddenly develop class consciousness and throw off their shackles as a result, I feel you may be falling into the same trap.

No, they socially engineer all the time. The housing bubble was a result of VI bankers trying to expand the property owning democracy as a buffer to the coming statist fiscal problems. This is a matter of record in the US senate and elsewhere.

The U.S doesn't exist.

Edited by Chef

Share this post


Link to post
Share on other sites

This isn't workable alternative, is there's demand for banking then free market theory says that eventually that demand will be met (if there's money to be made). Marxists have been waiting for decades for the masses to suddenly develop class consciousness and throw off their shackles as a result, I feel you may be falling into the same trap.

Except that the market isn't allowed to make it's own currency - the state has captured the money supply.

The U.S doesn't exist.

The US senate does though. :)

Share this post


Link to post
Share on other sites

In a free market, there are no companies.

Just individuals.

A free market dicates to you what there is and isn't, not the other way around.

The money supply and the banking system isn't the entirety of the problem, it's a large part of it.

You also present a false dichotomy. It's not "land market bad, banking system good" it's "land market shit, banking system shit."

The land market is the bulk of the problem, with centrally controlled interest rates adding a bit of fuel to the fire.

Money reformers are incabable of agreeing an an appropriate method of reform because they're too busy infighting, whereas LVT advocates are quite clear about the changes that need to be made.

So by advocating money reform you have no idea as to what you would be getting; do you feel lucky, punk?

Share this post


Link to post
Share on other sites

A free market dicates to you what there is and isn't, not the other way around.

no, reality dictates to you what there is and isn;t. In reality there are only individuals. All the freedom (in reality) will not change that at all.

The land market is the bulk of the problem, with centrally controlled interest rates adding a bit of fuel to the fire.

Money reformers are incabable of agreeing an an appropriate method of reform because they're too busy infighting, whereas LVT advocates are quite clear about the changes that need to be made.

Yes, clear and wrong.

The reform we need is the removal of coercion as the primary tool for social problem solving.

So by advocating money reform you have no idea as to what you would be getting; do you feel lucky, punk?

I don't advocate money reform.

Share this post


Link to post
Share on other sites

Except that the market isn't allowed to make it's own currency - the state has captured the money supply.

Yes people can make their own money, I've provided a link before which proves this. Citizens sometimes have to use a certain service to fulifill their obligations (which are decided arbitrarily, of course), but this isn't the same as preventing them from entering into the market, or competing directly with it.

Share this post


Link to post
Share on other sites

Yes people can make their own money, I've provided a link before which proves this. Citizens sometimes have to use a certain service to fulifill their obligations (which are decided arbitrarily, of course), but this isn't the same as preventing them from entering into the market, or competing directly with it.

People are not free to make their own money.

It's called counterfeiting.

Share this post


Link to post
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

Loading...
Sign in to follow this  

  • Recently Browsing   0 members

    No registered users viewing this page.

  • 200 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



×
×
  • Create New...

Important Information

We have placed cookies on your device to help make this website better. You can adjust your cookie settings, otherwise we'll assume you're okay to continue.