I am beginning to sound like a broken record. I keep saying it, the money supply is growing rapidly. The deflation story is a myth. Today's exhibit is narrow money. The Bank of England produces two measures of monetary growth. The first is notes and coins; in other words, cash in your pocket. The second measure is broad money, also known as M4. Without delving into the messy details, M4 is notes and coins plus the liabilities of banks and building societies.
However, it doesn't matter which measure you pick; the story is the same. Monetary growth picked up sharply, especially after the Lehman's catastrophe. In the long run, that can mean only one thing; inflation.
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