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Tuesday, 28 February 2012

Money printing floods the globe

The global money supply has increased by $10 trillion during the last eighteen months, according to Egon von Greyerz. [1]  This is approximately one sixth of total global annual GDP, which is a little over $60 trillion per annum.

Global money printing at this scale creates the risk of very high inflation when money circulation resumes.  It will be very difficult to remove the extra liquidity when needed.  In the meantime, much of the liquidity will flow into speculative investments, possibly into equities, and into energy, resource and agricultural commodities, generating upwards price pressure on daily necessities.

[1] Interview with King World News, February 24, 2012.

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