Category Archives: Monetary inflation

Unit of Real Value: the Yardstick with which to stabilise price inflation

This is an interesting story about Brazil, vouched to be correct by a commentator who lived in Brazil at the time.

The “Unit of Real Value” acts as an extra and REAL measure and thus provides a real and stable yardstick in a sea that wobbles with ‘credit money‘ and ‘interest money’ – unrelated to any real value.

The smart aspect is the fact that ‘monetary inflation’ is separated from ‘price inflation’, and the financial economy is separated from the real economy. And ‘economics’ becomes real rather than a ‘soft, sociological science’…

Who else might copy this model that worked???

Quantitative Easing: the BoE explains and I comment

Quantitative easing explained the American way on a 6-minute video.

First, I contributed to quantitave easing on Wikipedia.

Now, Ask the Deputy Governor offers the following 16 questions addressed to the Bank of England with their answers.

Aware of the Bank of England Act 1694, I comment not as an economist, but from the perspective of a mathematician, systems analyst and software diagnostician, formerly at CERN, looking at “money” and its purpose:

1. Given inflation has only just fallen below the Government’s 2% target, why is the Bank of England adopting such a large unconventional policy measure?
The effects of monetary policy on prices and real activity only come through after long and somewhat variable lags.

Comment: 2% inflation of consumer prices is only possible when measuring inflation extremely short-term. The Office of National Statistics keeps writing about annual inflation, while also gathering monthly data.

Inflation as “price inflation” is only one aspect. The real inflation is the supply of money as currency for the nation as a whole, which should be called “monetary inflation”.

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Common sense and history both suggest a pause in QE

QE means Quantitative Easing. It means Central Banks printing money. But their kind of money is Credit Money, i.e. somebody receives interest payments, and taxpayers pay via the Government’s share in the budget of “public debt interest payments”.

This letter in the FT prompted me to spell it out, once again:

When Governments print money, it’s “Cash Money” which is not only free of interest, but also gives them seigniorage as income.

However, creating money electronically out of thin air would not justify seignorage. But why do Governments hand their power of creating money over to their Central Banks?

Your guess about politicians and central bankers is as good as mine…

My response to Mr George Taferner is this:

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The Fed plans monetary inflation

This article is excellent as it makes the distinction between price inflation and monetary inflation.

And it reveals the true colours and intentions of the Fed.

I found it on this premier political community blog saying that apparently the Bank of England is taking its cue from the Fed.

What else is new?…