Investment Manager’s Report:
Marshallian ‘k’ is back. So what is it? It is the surplus liquidity in the economy, over and above that necessary to fund physical growth in nominal terms. Tatha Ghose of Kleinwort describes it as ‘the growth rate of free liquidity after accounting for the demand for money’. It is interesting because it is a state of disequilibrium. Since March we have seen central banks monetising freely, beginning in the USA. Japan, in its need to stop the Yen from rising, has if anything monetised harder than the USA, and Europe slightly less.
