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This is so damn obvious!

Ultimately increased money supply = inflation!

yeah I have to confess that my first thought when I read the piece was "no sh1t sherlock"

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It amazes me how many people don't understand Inflation and its cause. They think they know.

I think you all should do a survey of workmates, friends etc. I accused a workmate of not understanding the causes of inflation. His reply? (after getting very shirty) "Prices going up causes inflation".

(Ok price rises could cause more price rises, but its not the initial cause)

Inflation = decline in the purchasing power of money!

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Samuel Brittan on the build up in money supply prior to the dot-com bust, interesting parallels don’t you think?

Samuel Brittan: The Financial Times 22/7/99

In an article On May 13 I rejected the rationalisations used to justify the Wall Street surge (Nonsense on Stilts). It was accompanied by a chart showing an uncanny resemblance between the upturn of the 1990s and the upturn leading up to the 1929 crash
Strong growth in the money supply, a rapidly rising investment share within GDP, a widening current account deficit and a personal sector spiralling into deficit are all classic indicators of a domestic bubble. "Virtually all the indicators on the bubbles check list are flashing red for the US... When such bubbles burst soft landings never seem to be within reach."


Most bubbles develop during a period of above average growth and below average inflation. The inflationary pressure is often disguised by declines in global commodity prices or strong exchange rates which suppress inflationary symptoms for a while." Moreover, during a boom, rapid money supply growth feeds directly into higher output or higher asset prices, and the link between money and inflation is temporarily broken.
By all means be prepared for a reversal. But let us not forget that the seeds of a possible slump lie in over stimulus and irrational exuberance, above all in the US, but perhaps in other countries as well.

How right he was

Samuel Brittan 1999

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  • 301 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%

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