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It's interesting, I recall some early discussions where we were trying to work out some of the actual mechanisms involved in the bubble and ensuing crisis overall. A key point that came up was the question of measures of money supply and just how much money was in the system. We concluded (to no great purpose at the time) that some of the transactions must have been dedicated to getting around capital adequacy ratio directives... we could see symptoms, but couldn't see the mechanisms...
Linklaters role reminds me that many parts of UK Financial law are expressed mostly in archaic formal English, where multiple interpretations abound...
Guess who make more money.
Making money in more than one sense at that. "The future is already here -- it's just not very evenly distributed" William Gibson
The key issue here is that if you sit down with: a) M1 and M2 b) Interest rate decisions you will happily conclude that inflation has been low because inflationary pressures are low. This allows you to ignore the "asset bubble." Incidentally, this kind of round robin of measurements probably plays into the "core inflation" debate too. It's only when you look at M3 that you get an explanation for the "asset bubble."
a) M1 and M2 b) Interest rate decisions
you will happily conclude that inflation has been low because inflationary pressures are low. This allows you to ignore the "asset bubble." Incidentally, this kind of round robin of measurements probably plays into the "core inflation" debate too.
It's only when you look at M3 that you get an explanation for the "asset bubble."
Yes, according to Gary North and Mish. I finally got around to reading these posts, and I think you might find them interesting. You all are about to converge at the same conclusion: the real action has been in M2 and FRB repos, the ultimate buy-back scheme. Basically, the discount window has been and will remain a cover for sucking money out of circulation; supply has been flat, after all. (Graphs of YoY data sets)
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