Tuesday, 24 March 2009
UK Money supply growing at 18 percent
"the growth rates of money and nominal demand have slowed sharply."
Mervyn King, in this letter to the Chancellor, March 23rd 2009
Actually, the growth rate of money is accelerating, Mervyn. In January, it hit almost 18 percent. Moreover, it is growing faster than at any time since February 1990.
I am sure that there is nothing sinister here. Mervyn King isn't trying to mislead the Chancellor about monetary growth. After all, money supply data is public. If Alistair Darling was interested, he could ask his permanent secretary to download the data, just the same way I did.
The serious issue is here is that no one bothers to watch the money supply numbers. Those jokers down at the Treasury and the Bank of England do not think the M4 growth matters much. That is why the Bank of England could make such a elementary mistake as claiming that monetary growth is falling, when in fact, it is accelerating. It is also why the Treasury failed to pick up the mistake.
Foolishly, both the Treasury and the Bank of England think that there is no relationship between the growth of the money supply and inflation. We will see about that.