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Money Supply Is Root Cause Of Worldwide Inflation

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Damn, I thought that a financial paper was going to do an article on the patently obvious, alas not, it was a letter.

Oh well, at least it got published.

http://www.ft.com/cms/s/d0d1ccda-194b-11dc...0b5df10621.html

Money supply is root cause of worldwide inflation

By Antony Herrey

Published: June 13 2007 03:00 | Last updated: June 13 2007 03:00

From Mr Antony Herrey.

Sir, Your editorial "Global inflation: monetary policy around the world can still get tighter" (June 8) contends that New Zealand's new 8 per cent rate reflects its "tight monetary policy". You also declare that "central banks are doing their job: trying to allow the maximum economic growth compatible with their inflation targets".

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"Money supply is root cause of worldwide inflation"

Yes and when the NWO or what ever you call them turn the tap off so that they can buy all them BTL's for penneys in the pound then it will create world wide deflation and a mojor recession. You see it's hard to make money in a static market and so it has become fixed and has cycles.

our day is coming and their 25 years loan period is not going anywhere. :)

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Published: June 13 2007 03:00 | Last updated: June 13 2007 03:00

From Mr Antony Herrey.

Sir, Your editorial "Global inflation: monetary policy around the world can still get tighter" (June 8) contends that New Zealand's new 8 per cent rate reflects its "tight monetary policy". You also declare that "central banks are doing their job: trying to allow the maximum economic growth compatible with their inflation targets".

...

Instead of pretending to combat inflation with their ineffectual applied interest rates, central bankers should cease increasing the money supply at outrageous rates.

It's a nice idea, but in practice it isn't the central banks printing money that's the problem. In the UK at least, the broad money growth is being driven by an increase in the money multiplier. All the bank can do is control narrow (M0) money.

As far as I know there are no reserve requirements in the UK banking system, so if the credit channel collectively feels like expanding the money multiplier, there is no way for the BoE to stop that.

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Guest wrongmove
As far as I know there are no reserve requirements in the UK banking system, so if the credit channel collectively feels like expanding the money multiplier, there is no way for the BoE to stop that.

There is an itsy-bitsy reserve requirement, but not enough to prevent potentially huge expansion in M4.

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Double-digit increases in the money supply are highly inflationary no matter what the interest rates applied by the central banks. Instead of pretending to combat inflation with their ineffectual applied interest rates, central bankers should cease increasing the money supply at outrageous rates. The latter is the root cause of inflation around the world.

good letter, skirts around the outside of the problem, but the media in general won't focus on central banks

any editor drawing attention to the elite familes running the privately controlled central banks wouldn't last long imo

Edited by dnd

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It's a nice idea, but in practice it isn't the central banks printing money that's the problem. In the UK at least, the broad money growth is being driven by an increase in the money multiplier. All the bank can do is control narrow (M0) money.

As far as I know there are no reserve requirements in the UK banking system, so if the credit channel collectively feels like expanding the money multiplier, there is no way for the BoE to stop that.

I had a look at your blog (very good it is too). I liked the graphs and was curious to see the plateau in Money Multiplier from '92-'04 from where it takes off again. "So, why might the money multiplier be on the way up again after a decade of relative stability?" I think it might have something to do with Bankruptcies! I had a look at Wikipedia and saw a similar looking chart, showing an increase in bankruptcies around '03/'04 click here.

The mechanism by which this happens is that a bank needs to change the reserve ratio (money multiplier) when the debts go bad. See post 25 in this thread

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Guest mattsta1964
good letter, skirts around the outside of the problem, but the media in general won't focus on central banks

any editor drawing attention to the elite familes running the privately controlled central banks wouldn't last long imo

He's 'On the money' with everything he says. That's for sure!

The total absence of any mention of the growth of our money supply is astonishing and smacks of conspiracy

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