Feb 2012 MA growth decelerates from 6.4% to 5.2% 

Our new MA measure grew by 5.2% YoY which is a slightly lower growth rate compared to our measure in Jan 2012 of 6.4%. 


Quarterly Report No. 3 released

Following the March meeting of Kaleidic Economics we have released the 3rd Quarterly Report. The topic is the economic development of China and how it fits into business cycle theory. We identified and discussed the following key questions:

  • What is the right historical parallel?
  • Are GDP figures accurate?
  • How much growth is due to a housing boom?
  • Does economic growth translate into raised living standards?
  • Where are the brands?
  • Will China democratise?
  • Can policy errors be exported?

You can download the report here.


Jan 2012 MA jumps from 3.9% to 6.4%

The most recent data for the new MA is out and it shows an increase in year-on-year inflation from 3.9% in December 2011 to 6.4% in January 2012. You can see more details here


A comparison of monetary aggregates

The image above shows a range of measures of the UK money supply. Because of the scale it is hard to make out changes in any given measure, but the purpose is to see how they relate to each other in terms of scale.

It demonstrates how MA (in blue) is a narrow measure that incorporates more deposits than M1. I was surprised that M4ex is smaller than M2. We have also been playing around with a very broad measure, which is shown as MB. More news on that soon.

Update: the previous version used an area chart and showed the cumulative money stocks. We've now changed it to just show the money stock per measure (2/3/12)


Important updates to MA compilation

In January 2012 we made some important updates to our measure of the money supply (MA). These were primarily an attempt to simplify the compilation and ensure that the series we were using were compatible across various reporting institutions. Whilst the previous measure used various asset classes from the Bank of England's Divisia tables as the starting point, the new measure is simply defined as:

MA = Currency + Demand deposits

MA is really a measure of the money stock, as opposed to the money supply, and the chart below shows the total amount for as far back as the Bank of England data goes (Janaury 2010).

The chart below shows the difference between the growth rates in the 2011 measure of MA and the 2012 measure. This is obviously a major difference since the new compilation method is now pointing to a steadily increasing rate of monetary expansion, as opposed to a continued monetary contraction. We will continue to look into these issues and provide updates.