Comments on: Show us the money http://blogs.reuters.com/macroscope/2009/04/17/show-us-the-money/ Shining a light on the dismal science Wed, 16 Nov 2016 01:39:19 +0000 hourly 1 http://wordpress.org/?v=4.2.5 By: Steve http://blogs.reuters.com/macroscope/2009/04/17/show-us-the-money/comment-page-1/#comment-432 Mon, 20 Apr 2009 13:27:55 +0000 http://blogs.reuters.com/macroscope/?p=1006#comment-432 I applaud the BoE for addressing an issue that, to me, seems entirely obvious. It seems everyone is banging on about ‘money supply’ – but there is scant agreement on exactly what this term means. Everyone assumes it has a meaningful definition – but the term is extremely context sensitive and can easily cause confusion – both in communication and errors of judgement in reasoning.

Measuring lending to specific groups certainly seems to be a major step forwards. If only we could also had a handle of the velocity of that money, we might be able to paint a meaningful picture of the state of the economy.

Of course, there’s an obvious potential problem with this… How do we discriminate between existing debtors re-negotiating (or being forced to re-negotiate) loans to repay existing debts – which, in principle, could make bank lending higher than it should be. We also need a metric for repayment of debt. These figures, in combination, might say lots about our collective solvency.

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By: Richard Downing http://blogs.reuters.com/macroscope/2009/04/17/show-us-the-money/comment-page-1/#comment-431 Mon, 20 Apr 2009 13:15:02 +0000 http://blogs.reuters.com/macroscope/?p=1006#comment-431 It will show what the panel want it to show. Indicators always do at the start, then, when it becomes useful, they will say it’s not realistic and invent a new one. The RPI comes to mind, for some reason. Unless of course there are free public elections of members of the panel, and they are all over career-fostering age.

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