Last month I reported on a revised version of MA – an “Austrian” measure of the money supply – which suggested that the UK economy is undergoing a monetary contraction. As part of that project we are updating the measure on a monthly basis, and can report that in June 2011 MA continued to contract, but at the slightly lower rate of -5.1%.
Most economists accept that narrow money does not tell us much about the economy, but MA suggests that broad money is actually underestimating the scale of the problem.
