EXCERPT:
"A surge in money supply measures reflect a mix of technical banking factors and investor unease, and isn’t a harbinger of an inflation surge, economists say.
While it wasn’t widely remarked upon when it was released last week, some in markets were taken aback by unexpectedly large increases in some of the broadest measures of money stock, as reported by the Federal Reserve.
Stone & McCarthy Research Associates flagged the second largest increase in the so-called M2 money stock measure — it captures cash and other highly liquid assets — on record for the July 4 week. Wrightson ICAP flagged an “explosion” taking place in M2, while Capital Economics said an internally created measure of money supply is growing at the fastest rate in two years.
What gives? Is the kindling of an inflation surge finally being lit? Or is something else afoot? Economists suggest the latter is most likely the case.
