I built a UK Trueflation chart that shows how inflation links to money printing

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I built this chart to show M4 the amount of money in UK circulation and compared it against the price of the FTSE100.

Looking at the graph, even though the FTSE100 is at an all time high, relative to money printed it's worth about 30% less than pre pandemic times.

Inflation is caused by excessive money printing and the UK is no different.

But.. M4 is not money printing. M4 is the counterpart to M4L which is the driver ofmoney creation. Money in the UK is primarily created by commercial banks [1].

Inflation is indeed amonetary phenomenon, to re-hash Friedman. Unfortunately for this quote the world has more nuance:

The quantity of M2L excluding OFCs can work as a forward indicator to inflation, especially as it's more timely than CPI data. Sometimes. It depends what's happening to velocity too.

The 1980s showed the breakdown in causality between broader forms of money and inflation. To return to that policy would be a disaster.

But why would you compare it to a stock index? Stock is didcounted by interest rates. When rates change so does the discounting factor. That's only one problem with this apples to grapes comparison.

[1] https://www.bankofengland.co.uk/quarterly-bulletin/2014/q1/m...

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