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Sisyphus

M4 Money Supply Increases.

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BOE provisional figures released this morning :

M4 YOY 12.6% (market expected 12.1%)

M4 Dec Sterling Lending £23billion (market expected £11billion)

Feb rate cut looking less likely now.

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these figures are from Bloomberg by the way - haven't seen them on the BBC yet.

Public Sector Net Borrowing for Dec was also higher than expected at £6.5 billion vs expected £4.4billion.

Sisyphus

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these figures are from Bloomberg by the way - haven't seen them on the BBC yet.

Public Sector Net Borrowing for Dec was also higher than expected at £6.5 billion vs expected £4.4billion.

Sisyphus

Only 50% higher on the month then against forecast! Jeez.

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Dreadful figures.

The BOE have let borrowing get totally out of control, in fact they have encouraged the latest flare up in debt with their summer rate cut.

Debt growth in real terms is multiples of what it was during the 80's boom and bust and is being spread over a longer period of time so that it affects as big a pecentage of the popualtion as possible.

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Things must be good then.

More money to go round, people have the confidence to borrow, individually and the Government. This shows they are happy about the future and their ability to repay.

:)

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BOE provisional figures released this morning :

M4 YOY 12.6% (market expected 12.1%)

M4 Dec Sterling Lending £23billion (market expected £11billion)

Feb rate cut looking less likely now.

That is horrific. I can imagine gold will get a kick after that news. The MPC really have to come off the fence soon.

LONDON (AFX) - The pound was slightly firmer as solid UK retail sales

figures, along with more evidence of a strengthening housing market, lessened

the chances of an interest rate cut by the Bank of England as early as next month.

Figures out today showed retail sales increased by 0.4 pct in December. from

the previous month, in line with forecasts. The annual increase at 4.0 pct was

the highest annual increase since November 2004 and above forecasts for a more

modest 3.6 pct rise.

Edited by karhu

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This stinks of debt being used to pay for debt, this illusion of everyone living the posh and becks lifestyle is going to cripple this Country once the lenders pull the reigns.

Sam

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these figures are from Bloomberg by the way - haven't seen them on the BBC yet.

Public Sector Net Borrowing for Dec was also higher than expected at £6.5 billion vs expected £4.4billion.

Sisyphus

You will not see these figures on the BBC, website or TV.

A. just not interesting enough whilst the dumbed down masses wait for eastenders

B. remind me, who is in charge of the BBC? :P

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So, where does all this new money go?

Government expenditure?

Support for bank mortgage lending?

Govt purchases of US debt?

With a CPI at only 2.1 percent it certainly doesn't show up in official stats that traditionally move markets. All of the above doesn't, over the long term, create wealth. It certainly looks like a paper money bubble.

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BOE provisional figures released this morning :

M4 YOY 12.6% (market expected 12.1%)

That can't be right, inflation is only 2% so that means GDP has leap to 10% YoY, yup, that can be the only explanation :)

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You will not see these figures on the BBC, website or TV.

A. just not interesting enough whilst the dumbed down masses wait for eastenders

B. remind me, who is in charge of the BBC? :P

Well tough luck. They'll soon be experiencing the effects of it in terms of more expensive borrowing.

So, where does all this new money go?

Government expenditure?

Support for bank mortgage lending?

Govt purchases of US debt?

With a CPI at only 2.1 percent it certainly doesn't show up in official stats that traditionally move markets. All of the above doesn't, over the long term, create wealth. It certainly looks like a paper money bubble.

The CPI figures are useless, even the MPC are open about that. I thought inflation was defined as the increase in the money supply.

That can't be right, inflation is only 2% so that means GDP has leap to 10% YoY, yup, that can be the only explanation :)

What about the horrendous trade defecits that both UK and US have at present? GDP - don't make me laugh.

Edited by karhu

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That can't be right, inflation is only 2% so that means GDP has leap to 10% YoY, yup, that can be the only explanation :)

Actually the reverse, if money supply is rising way in advance of measured GDP growth (3.5%) then it shows that the real economy (not monetary figures) is contracting, gettting less efficient, producing less, selling less.

Hi

Look up about the velocity of money and you may have an explanation.

May, but then again may not. The overall monetary debt is rising, mortage debt for example up £100Bn ish over 12 months, around 10%, no velocity factor there just straight added debt. Unless of course I totallymisunderstand what does and does not go into the M4 lending figure.

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Actually the reverse, if money supply is rising way in advance of measured GDP growth (3.5%) then it shows that the real economy (not monetary figures) is contracting, gettting less efficient, producing less, selling less.

May, but then again may not. The overall monetary debt is rising, mortage debt for example up £100Bn ish over 12 months, around 10%, no velocity factor there just straight added debt. Unless of course I totallymisunderstand what does and does not go into the M4 lending figure.

Well there you have it. Ten percent increase YOY on mortgage lending and a 2 percent increase in CPI. There's our 12 percent increase in the money supply. So that's where the new money is going. This does look like an orchestrated ponzy scheme more and more.

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Well there you have it. Ten percent increase YOY on mortgage lending and a 2 percent increase in CPI. There's our 12 percent increase in the money supply. So that's where the new money is going. This does look like an orchestrated ponzy scheme more and more.

"M4 Dec Sterling Lending £23billion (market expected £11billion)". The mortgage lending doesn't account for it all so such a straight comparison cannot be made, but mortgage lending does account for a very large propertion of it. Depends what makes up the rest of it, some of it may be "velocity" effects but I bet another big chunk is straight out and out debt creation.

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"M4 Dec Sterling Lending £23billion (market expected £11billion)". The mortgage lending doesn't account for it all so such a straight comparison cannot be made, but mortgage lending does account for a very large propertion of it. Depends what makes up the rest of it, some of it may be "velocity" effects but I bet another big chunk is straight out and out debt creation.

I think we both agree that the vast majority of new M4 is the result of credit (either new mortgage, MEW or new consumer credit) which is increasing at an alarming pace considering the rate of GDP growth, unemployment growth and real inlfation. The question is, how long can this be sustained without an interest rate hike or the dribbling through of inflation into the real economy? IMHO we are at the juncture where the BOE has to make a choice; chance it on low interest rates hoping that "things are different this time" or hiking interest rates knowing they put the boot in for a lot of Mr and Mrs Average. What is more important to the UK?

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I think we both agree that the vast majority of new M4 is the result of credit (either new mortgage, MEW or new consumer credit) which is increasing at an alarming pace considering the rate of GDP growth, unemployment growth and real inlfation. The question is, how long can this be sustained without an interest rate hike or the dribbling through of inflation into the real economy? IMHO we are at the juncture where the BOE has to make a choice; chance it on low interest rates hoping that "things are different this time" or hiking interest rates knowing they put the boot in for a lot of Mr and Mrs Average. What is more important to the UK?

I don't know. But if companies are only able to get say 3-4% increases in earnings and in real terms those earnings are falling by 10% (through the printing presses) and primary costs keep going up at double digit rates then it can only be a number of years (2-5years) until a fair old percentage of companies will fold and the stock market will be in tatters, even if the increased money supply in itself may mean more bits of paper flaoting around the system.

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Not sure I understand the effect of giving people access to more debt. If you halve interest rates you can then afford to spend around twice as much on a house using the same monthly expenditure. The supply of houses is fixed, so the price must double. That's whats happened.

But all this money does not flow out into the general economy. It's just reflected in asset prices. So if no one is spending more on their house oer month, what's changed? (there might be some leakage of cash from downsizers, MEWers Equity Release etc, but this is only a fraction of the money that is handed out for free)

So how and when will this hit RPI inflation?

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real inflation is directly proportional to M4.

They print off extra 12.6% in one year (free money for themselves, effectively devaluing our money by 12.6%). no wonder the property market hasn't crashed.

nobody questions it (M4) and it is almost completely ignored by the media.

Then they tell us inflation is 2% and people believe it!

They don't even have to spend money on printing presses and paper because they can just digitally create it.

Edited by pop

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Not sure I understand the effect of giving people access to more debt. If you halve interest rates you can then afford to spend around twice as much on a house using the same monthly expenditure. The supply of houses is fixed, so the price must double. That's whats happened.

But all this money does not flow out into the general economy. It's just reflected in asset prices. So if no one is spending more on their house oer month, what's changed? (there might be some leakage of cash from downsizers, MEWers Equity Release etc, but this is only a fraction of the money that is handed out for free)

So how and when will this hit RPI inflation?

It wont , which is why isn't causing inflation no more than it has in the recent past. Here is historical M4 growth since 1996

31-Jan-96 10.6

29-Feb-96 9.8

31-Mar-96 9.7

30-Apr-96 9.9

31-May-96 9.4

30-Jun-96 9.8

31-Jul-96 9.1

31-Aug-96 9.3

30-Sep-96 10.2

31-Oct-96 10.5

30-Nov-96 10.8

31-Dec-96 9.6

31-Jan-97 9.7

28-Feb-97 11

31-Mar-97 11.2

30-Apr-97 10.3

31-May-97 11.4

30-Jun-97 11.8

31-Jul-97 12

31-Aug-97 11.7

30-Sep-97 11.6

31-Oct-97 10.7

30-Nov-97 10.7

31-Dec-97 11.9

31-Jan-98 11

28-Feb-98 10.8

31-Mar-98 10

30-Apr-98 10.7

31-May-98 9.8

30-Jun-98 9.6

31-Jul-98 10.3

31-Aug-98 9.1

30-Sep-98 9.4

31-Oct-98 9.4

30-Nov-98 8.7

31-Dec-98 8.2

31-Jan-99 7.9

28-Feb-99 7.6

31-Mar-99 7.2

30-Apr-99 7.6

31-May-99 7.3

30-Jun-99 5.7

31-Jul-99 4

31-Aug-99 4.6

30-Sep-99 2.9

31-Oct-99 3.4

30-Nov-99 3.6

31-Dec-99 4.1

31-Jan-00 3.4

29-Feb-00 3.3

31-Mar-00 5.3

30-Apr-00 5.2

31-May-00 5.6

30-Jun-00 6.6

31-Jul-00 7.2

31-Aug-00 8.8

30-Sep-00 8.9

31-Oct-00 8.8

30-Nov-00 8.3

31-Dec-00 8.3

31-Jan-01 9.7

28-Feb-01 9.3

31-Mar-01 8.4

30-Apr-01 7.9

31-May-01 7.3

30-Jun-01 7.6

31-Jul-01 7.8

31-Aug-01 7.2

30-Sep-01 8.4

31-Oct-01 8.4

30-Nov-01 8.1

31-Dec-01 6.8

31-Jan-02 6

28-Feb-02 6.6

31-Mar-02 5.8

30-Apr-02 5.7

31-May-02 5.6

30-Jun-02 6.1

31-Jul-02 6

31-Aug-02 6.1

30-Sep-02 6

31-Oct-02 5.8

30-Nov-02 6.3

31-Dec-02 7.3

31-Jan-03 6.5

28-Feb-03 6.6

31-Mar-03 7.4

30-Apr-03 8.2

31-May-03 8.3

30-Jun-03 8

31-Jul-03 7.2

31-Aug-03 6.3

30-Sep-03 6.6

31-Oct-03 6.3

30-Nov-03 7.1

31-Dec-03 7.3

31-Jan-04 8.7

29-Feb-04 8.4

31-Mar-04 7.9

30-Apr-04 7.4

31-May-04 8.2

30-Jun-04 8

31-Jul-04 9

31-Aug-04 10

30-Sep-04 9.1

31-Oct-04 9.7

30-Nov-04 9

31-Dec-04 9

31-Jan-05 9.4

28-Feb-05 9.7

31-Mar-05 10.6

30-Apr-05 10.6

31-May-05 11.2

30-Jun-05 10.6

31-Jul-05 11.1

31-Aug-05 10

30-Sep-05 11.2

31-Oct-05 11.5

30-Nov-05 12

31-Dec-05 12.6

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Straight from the horse's mouth.

http://www.bankofengland.co.uk/education/t...ial_markets.htm

money and inflation

The amount of money in the economy and the level of prices are positively related in the long run. Without money, inflation could not exist. And, across many countries, persistently high rates of money growth have usually been associated with high inflation.

Excess demand is likely to be accompanied by strong growth in the amount of money deposited in banks and building societies, and the amount of lending undertaken by banks and building societies. Consider, for example, what happens if the official interest rate is reduced. Banks are likely to reduce the interest rates they charge on their loans to individuals and businesses. In addition to boosting spending directly, this is also likely to lead to increased demand for loans which, if met, will increase the amount of money in bank deposits. So a change in the official interest rate is likely to result in a change in both bank deposits and bank lending.

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Straight from the horse's mouth.

http://www.bankofengland.co.uk/education/t...ial_markets.htm

money and inflation

The amount of money in the economy and the level of prices are positively related in the long run. Without money, inflation could not exist. And, across many countries, persistently high rates of money growth have usually been associated with high inflation.

This is an interesting analysis of the correlation between M4 and inflation. Some fondness for graphs and frequency anlysis desirable.

In a nutshell the correlation varies wildly, but is shown to be positive over long time periods.

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in my book. m4 is the only useful figure. all other inflation figures are ficticious and misleading.

I've watched bloomberg all day today and it hasn't even been mentioned once.

If they can 'print off' 13% per year extra a year and use it to pay for new civil servants etc, then this money will end up filtering through to the housing market. (thus soft landing)

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31-May-97 11.4

30-Jun-97 11.8

31-Jul-97 12

31-Aug-97 11.7

30-Sep-97 11.6

31-Oct-97 10.7

30-Nov-97 10.7

31-Dec-97 11.9

31-Jan-98 11

These two groups appear remarkably similar, anyone care to hazard a guess as to why? Also, the second group of figures appears to be accelerating (from Aug) quite rapidly.

31-Mar-05 10.6

30-Apr-05 10.6

31-May-05 11.2

30-Jun-05 10.6

31-Jul-05 11.1

31-Aug-05 10

30-Sep-05 11.2

31-Oct-05 11.5

30-Nov-05 12

31-Dec-05 12.6

<_<

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31-May-97 11.4

30-Jun-97 11.8

31-Jul-97 12

31-Aug-97 11.7

30-Sep-97 11.6

31-Oct-97 10.7

30-Nov-97 10.7

31-Dec-97 11.9

31-Jan-98 11

These two groups appear remarkably similar, anyone care to hazard a guess as to why?

It was after the big collapse in the Asian markets in that year, '98 saw the collapse of the massive LTCM hedge fund and the Russian debt default. Both were mopped up by pouring in more liquidity, that set the stage for the dot.com boom, after boom and 9/11 the Fed had to mop things up again, that set the stage for the housing boom...

... after that bust in 2006 Bernanke poured in ever more liquidity and hidden the M3 numbers, that created the Dow 16,000 and commodity bubble that really took off in 2007-08.

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  • 302 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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