Realistbear Posted June 18, 2006 Share Posted June 18, 2006 http://www.thisismoney.co.uk/news/article....01&in_page_id=2 Cash glut fuels inflation fears Dan Atkinson, Financial Mail 18 June 2006 INFLATION fears could be stoked this week by official figures expected to show continuing rapid growth in the amount of money in the economy. Hard on the heels of Bank of England Governor Mervyn King's warning last week that recent monetary policy may have been too slack, the May figures for money supply, due on Tuesday, are likely to show a continued surge in growth. As the amount of notes, coins and bank deposits balloons, there are suggestions that ultimately too much money will be chasing too few goods. If true, it could either push up inflation or widen the already-yawning trade deficit. Either way, sterling could come under pressure. The canny Scot is going to have to come up with another way of keeping HPI and MEW (the "Miracle Economy") going because it looks like the games up on the raising liquidity trick. Quote Link to comment Share on other sites More sharing options...
tomr Posted June 18, 2006 Share Posted June 18, 2006 The canny Scot is going to have to come up with another way of keeping HPI and MEW (the "Miracle Economy") going because it looks like the games up on the raising liquidity trick. Saw also today that Amex are pulling out of the "balance transfer" credit card market, as apparently the industry loses £600m a year due to rate tarts. If other lenders follow suit, that's another stream of cheap debt that will have dried up. Quote Link to comment Share on other sites More sharing options...
no dice Posted June 18, 2006 Share Posted June 18, 2006 The Money Morning e-mail today contained this chart showing M4 lending growth. The credit tap is still wide open in the UK. Quote Link to comment Share on other sites More sharing options...
tomr Posted June 18, 2006 Share Posted June 18, 2006 The Money Morning e-mail today contained this chart showing M4 lending growth. The credit tap is still wide open in the UK. Jesus, that's a pretty big spike right at the end though. Quote Link to comment Share on other sites More sharing options...
Warwickshire Lad Posted June 18, 2006 Share Posted June 18, 2006 That graph has a very close correlation with inflation-adjusted house prices. Quote Link to comment Share on other sites More sharing options...
OnlyMe Posted June 18, 2006 Share Posted June 18, 2006 Party like its 1929. Quote Link to comment Share on other sites More sharing options...
Warwickshire Lad Posted June 19, 2006 Share Posted June 19, 2006 Jesus, that's a pretty big spike right at the end though. Just what the hell IS going on there ? Quote Link to comment Share on other sites More sharing options...
Bubble Pop Electric Posted June 19, 2006 Share Posted June 19, 2006 Just what the hell IS going on there ? The last desperate attempts to stave off a looming economic disaster. Quote Link to comment Share on other sites More sharing options...
Realistbear Posted June 19, 2006 Author Share Posted June 19, 2006 (edited) The last desperate attempts to stave off a looming economic disaster. Printing money and flooding the economy with cheap credit is the driving force behind HPI. Look what it did in Japan and what happened to house prices as a consequence. When you rely on inflation to stimulate the economy, as Gordon has (HPI), there must be an economic backlash to return prices to equilibrium where price matches the fundamentals, more or less. Our HPI is completely adrift from the fundamentals and has been since about 2002. Cheap credit and printing money has kept Gordon's Miracle Economy going on nothing but opinion for the last 4 years and, as Mervyn says, debt is reality. The bottom line, as always: there ain't no free lunch. Edited June 19, 2006 by Realistbear Quote Link to comment Share on other sites More sharing options...
Recommended Posts
Join the conversation
You can post now and register later. If you have an account, sign in now to post with your account.