Sunday, May 31, 2009

It gets very hard following the Bank of England's M4 figures, because they keep changing them regressively. For instance they claimed an M4 March figure last month of 17.6% but revised that this month to 18.2%. Because they also only release 'seasonally adjusted' figures on a provisional basis, this constant figure juggling makes month-by-month comparisons of what's going on quite tricky; though I do think we can see the general trend - the Pound in your pocket is becoming worth less every day, losing up to a fifth of its value a year, year on year (whereas it only used to lose a tenth of its value a year, a couple of years back).

If we can believe them, the latest figures show that inflation last month declined slightly to 17.4%, which combined with a base rate of 0.5% gives us a current UK effective interest rate of -16.82%.

With all the news in the UK press of 'The Pound Booming' (i.e. losing value less quickly than the Dollar) and other spurious 'green shoots' nonsense, it should be interesting to see what happens to M4 over the next few months if the banks start disgorging some of the filthy lucre the UK Treasury and Bank of England have been filling them up with over the last few months.

No doubt Gordon Brown and Peter Mandelson will be hoping that the green shoots last for a few months yet, and will be urging the banks to get this money out of the door, before being forced to call an election, hopefully from their point of view before this manufactured quantitative easing bubble bursts even more spectacularly than the credit crunch bubble.

Ah, those happy days of bouncing along the bottom for ten years, with money growth inflation at only 10% a year, to fund the massive boom in house prices. And look at the mess that got us into. With M4 now bouncing around 17%, to get us out of the previous bust, the future bust we are building will be quite spectacular.

Ho hum.

Latest April 2009 M4 figures.

Previous March 2009 figures.

1 comment:

denverthen said...

Great stuff, Jack (as always).