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Recent Posts

Deflation Case Study: United Kingdom

I have repeated the work of earlier case studies in this case turning my attention to the UK (please read earlier posts for an explanation about M3 Inflation). The graph is a comparison of my measure of inflation with the official CPI measure of inflation.  The first thing that is apparent from the graph is that [...]

M3 Inflation and Ireland: Deflation Sets In

My thought bubble on M3 Inflation is going to be developed further as time goes on. The basic premise is that the annual growth rate of money supply (M3) minus the amount money can earn in a year (short term interest rates) will approximate a ‘true’ measure of inflation/deflation. This type of measure is needed [...]

Net Foreign Debt Wagging the Money Supply Dog

Source: RBA Statistics

The graph above fairly clearly indicates that Net Foreign Debt (NFD) is a leading indicator for changes in M3 money supply. It looks like there is around a six month lag (give or take) between NFD moving and then M3 following suit.

The majority of foreign debt generated by Australia is not a result [...]

M3 Inflation and the Gold Price

In a recent post  an alternative proxy of inflation was created which was very basic in concept. Basically the idea was that the annual growth in money supply minus short term interest rates would represent the general level of inflation and deflation in an economy. The argument is that the annual growth rate in money [...]

Deflation Case Study: Latvia

This case study really should have been one of the first covered because the deflation dynamics at play in Latvia have been more pronounced than just about any other country in the world. This case study will confirm many of the patterns we have seen in previous case studies. Namely a fall in the value [...]

Australia: On the Precipice

The popular opinion if one is to believe the mainstream media and various talking heads is that Australia has missed the worst of the GFC and the future looks bright as Australia gravitates back towards ‘normal’ growth levels. The unseen opinion is that Australia is on the precipice of a debt deflation period, which will [...]