Bank of England Pound note featuring Governor of the BoE Mervyn King © Matt Buck Hack Cartoons
I am reading Citywire on the prospects for more Quantitative Easing in the UK. Bluntly, this means the invention of new paper money to try and help prop up the UK’s faltering economy. There’s some reaction reported by Reuters here.
Typically, creating money brings price inflation of consumables and the hoarding of assets and resources by those who can afford them – as this fine Canadian animated film explains.
“Typically, creating money brings price inflation..” Oh yes? So how come there was an astronomic and unprecedented increase in the U.S. monetary base 18 months ago, yet inflation is at record lows? The relationship between the money supply an inflation is teensy bit more complicated than “more money means inflation”