Saturday, December 29, 2007

Northern Rock - inflation anyone?

A long time ago, when I had hair and my student grant was sufficient to fund a sumptuous lifestyle in the Union Bar, I dabbled in a bit of economics. I vaguely remember something about M1 and M2, and the increase of the money supply causing inflation.

So I did wonder if injecting an extra £25 billion (or is it £50 billion?) into the "money supply" via Northern Rock might not do an awful lot of good for the inflation rate.

It is nice to finally find someone in print speculating on the same subject. Simon Hoggart in his Diary today says, while commenting on the police pay situation:

As for inflationary pressure, what on earth is Northern Rock going to create?

Mind you, presumably £25 billion is peanuts in the scheme of things (e.g government expenditure of £600 billion-odd annually).

I welcome input from someone who knows what they are talking about on this subject. There usually seems to be someone with a PhD in most subjects floating around.

No comments:

Post a Comment