How can we tell when a government is said to be printing money? What are the visable signs and effects.? I've heard that the Fed is printing money and wondered if we in the uk were also.Is it a sign that something is wrong with the economy??
You can see growth in money by measuring M0, which is sterling notes and coins in circulation outside the Bank of England including those held in tills of banks and building societies plus banks' operational deposits with the Bank of England. Also known as narrow money.
The affects would be erratic prices, asset bubbles and rapid increases in the price of natural resources and basic utilities, like huge surges in the price of oil and gold. "Printing money" is only a turn of phrase of course, these days you don't need to even bother printing the notes, you just monetise debt and adjust figures on the computer at the central bank.
M3 is the measure of broad money supply, which is currently running at 9-13% annualised in the UK. That could mean that 1 last year is in reality only worth 90p today, but of course inflation is only in the region of 2% according to the ONS so that's ok then ;)
I wouldn't get too attached to these figures though, the Federal Reserve in the US will discontinue publishing M3 data in March of this year.
Of course M0 (physical money) only represents about 3% (?) of actual money in existence.
the price of natural resources and basic utilities, like huge surges in the price of oil and gold. "
Isn't that what we have got in the uk at the moment?
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