Pump it up
News this morning that the local stock market is at a five-year high.
News has been everywhere for at least the last year that housing prices are running rampant again.
And all this in an economy as flat as a morning after the night before.
Don’t you think it’s inevitable that pumping the money supply at the rate of 5 to16.55% per year will see it increasingly slop over into share and housing markets?
Don’t you think that as long as we do have a Reserve Bank meddling with the money supply, that perhaps it’s time share and house prices were included in the Consumer Price Index, against which the Reserve Bank’s performance is measured?
And don’t you think more folk should realise that GDP—that so called measure of “production”—is really only a measure of how much money changes hands, and the more you pump up the money supply the more this figure is being massaged?
Or to use a more appropriate word, faked?
Here’s Elvis Costello: