Wednesday, March 19, 2008
The helicopter propellers are whirring.
Yet that is already soaring. According to Capital Economics, M3 - the broadest measure of the money supply - grew at an annual rate of 15.3pc in February, almost double the long term average and the highest rate of growth in 37 years.
Economists debate the relative wisdom of such a move. Many are concerned that such rapid growth will lead to rampant inflation
However Paul Ashworth, senior US economist at Capital Economics, said: "This is not necessarily inflationary. The increase has to be measured against the rising precautionary demand for relatively liquid balances in the current period of financial market distress. Indeed, there is a risk that even after the latest acceleration, the supply of money is still not increasing quickly enough.