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

Narrow Money Supply

Recommended Posts

Bank of England, yes, I understand that.. but what I don't quite get is how it fits in in the context of money supply.

I will explain what I think happens and perhaps someone could put me straight?

Banks run a fractional reserve, meaning that there is never as much money on deposit as is lent out. The expansion of money supply due to this effect is broad money or M4. (Simple explaination here: http://money.howstuffworks.com/bank1.htm )

For this to be possible there has to be an actual amount of tangible money or narrow money (M1).. this is the value of all money that is not borrowed such as the cash in your hand or the fraction of the money in your savings account that has not been lent out by the bank to other people.

When the bank of England wants to increase the supply of narrow money they can print it as notes or create it as a positive balance in an account.. but who do they give the notes to or who's balance do they credit?

Any suggestions welcome.

Libs

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.

  • 295 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.