Inflation in US
![](https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjP9t1mSUCnMBCMn9pRlEqaP0I8BMQHZmztx6aldtdW9kwbhkT4gedu0mqrSJSiqVk5uELoiUtGPyr-GTrMSWOYYsWSE4X5Ux5hAbmh2bWlHBhuFiZe8BEQhwXzRDs5VjLfpD4k-7zWhYHU/s400/inflation-us.png)
The US is experiencing disinflation (falling inflation rate), despite pursuing quantitative easing which has led to a rapid growth of M2 measure of money supply. This graph, explains how you can increase the money supply without inflation.
![](https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjQZQWtuerxD2ztseCmiVCA_ZErP2wfE8yZO4h225_WaIn48OFlB82SNZaTrr0PmJ8ut5y-LVQ_kUp0uQzw6wi-O07AO6kfrkRGXa3SwsuxNw_MBl7z3-iuDxw_z8TMXwBENq9f4yNSKKYS/s400/velocity-1.jpg)
Velocity of circulation is basically, the number of times money changes hand in an economy. With an economic slowdown, transactions falls. Therefore, despite a rise in the stock of money, (M * V) money supply may not rise and Output can be below potential. (see: Increasing Money Supply and MV=PY)
This has been covered before in Money Supply and Inflation in US
According to a poll by the Telegraph, a majority of economists are more worried about inflation than deflation in the UK. (link) However, with the rest of the world, being pulled into deflationary pressures, I would be more concerned about deflation. A short reminder why deflation could be very damaging to economies - Why deflation is harmful
The UK will be influenced by global inflation. With falling commodity prices, a tightening of fiscal policy, and global spare capacity, this lower inflation is likely to feed into lower UK inflation, once temporary factors have faded.
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