the fourth place

I wrote before about the strange notion of an interest rate that is too low, sparked by an unqualified mention on a UKIP party blog. People moan about high interest rates and interest rate rises so often that seeing it the opposite way around seemed bizarre. Without realising I'd even entited my previous post "Interest rates too high?" a neurological misfiring of the highest order - now corrected.

Anyway, I found a piece via Samizdata a UKIP sympathetic blog about the notion of denationalized money and how it can cure certain ills arising from an increase in the quantity of Government controlled money.

Inflation can only result if governments expand the money supply in an attempt to prevent the rise in unemployment. [....] The influx of new money, to the extent that it artificially lowers the interest rate, stimulates investment, especially in producer goods. Once the inflation is brought to an end, or once the interest rate is no longer too low, the uneconomic nature of the investments becomes apparent. The temporary boom ends up as a recession.

I've long heard arguments that the current administration's handling of the economy will lead to some kind of fantastic bust, citing money supply. Things are starting to go click in my head.