Financial Markets

These days, the commercial banking system isn’t where the action is. Instead, it’s the shadow banking system that needs direct feeding to goose inflation—at least inflation in asset prices, and also to keep the debt service on the nation’s debt as low as possible.

During December 2019, year-over-year growth in the money supply was at 5.53 percent. That's down from November's rate of 5.9 percent, but was up from December 2018's rate of 3.90 percent.

If the small sample size of monetary history is any guide, the combination of asset market crashes and high goods inflation empowers sound money forces in the political arena. At the moment, neither of those factors are in play.

Last month's election gave Boris Johnson a strong majority in Parliament, but two economic wildcards could trip his new government up.