Monthly Monetary Updates 2025
An archive of Professor Tim Congdon's Monthly Monetary Updates from the year 2025. In this archive you can find a link to his Monthly Note videos, the Money Notes (PDF) and also the slides used in the Monthly Notes (PDF).
December:
*** No money note or video was produced in December 2025 ***
November: Shortening of US national debt
Inflaton is unlikely to return to the Fed's 2% target during the remainder of the Trump presidency, argues Tim Congdon. The growing US public debt is beign largely financed by institutions like Money Market Mutual Funds, whose purchases increase the quantity of money.
October: When do we need to worry about losses in the financial markets?
Losses in credit markets often hit the headlines as it is frequently believed they are a prelude to a downtown in the economy. Tim Congdon argues that this is not the case - but that there is one particular kind of loss that is very significant for monetary policymakers.
September: Money and inflation at the time of Covid
This month's video is a plug for Tim Congdon's latest book Money and inflation at the time of Covid, which is due to be published next month. As Professor Congdon explains, the book is divided into two parts. In the first, he explains his analytical framework – the quantity theory of money, which goes back a long way historically, although some aspects of how he approaches it are peculiar to himself – in particular, his strong emphasis on broad money and the importance he places on the commercial banking sector and their extension of credit to the state and the public sector. In the second part of the book, he shows how he applied this theory to the events of 2020, when broad money growth was surging in most developed economies yet most economists, along with the financial markets, were expecting a lengthy period of disinflation or even deflation. Although he fully admits that his approach makes him very much an outlier in the economics profession, the fact remains that he correctly predicted the inflationary surge of 2022-23 which caught most other economists by surprise.
August: Money and the state
In this month's video, which is somewhat longer than usual. Professor Tim Congdon explains why the present monetary order of fiat currencies, central banks and a highly leveraged commercial banking sector is compatible with the idea of a free society.
He considers two alternative arrangements - firstly, the idea of private money and/or competing currencies, proposed by Hayek in his 1978 book The Denationalisation of money, which is claimed to have been a big influence on the creators of the first cryptocurrencies. He asks the question - is competition always a good thing? Who would want two competing governments in the same country? Furthermore, we as consumers want to use the same currency, day in day out. Competing currencies would also increase the potential for fraud.
Milton Friedman, while not entirely consistent during his long career, supported 100% cash reserve banking. In response, Professor Congdon gives a brief history of the development of banking, starting with goldsmiths and explaining how banknotes came to be accepted instead of gold as a means of payment because this was so much more convenient. He then mentions that fractional reserving enabled banks to operate at a profit with far lower rates of interest than would have been the case with 100% reserving. In other words, Friedman's proposals would be very inefficient and appallingly illiberal. The banking system as we know it was the product of human action, but not human design.
July: Money growth trends in Summer 2025
In this video, Professor Tim Congdon discusses money trends in the world's leading advanced economies - the USA, Eurozone Japan and the UK. The message as far as the USA, UK and Eurozone are concerned is that broad money growth has returned to the low and stable levels seen prior to the coronavirus pandemic of 2020, when broad money growth spiked, leading to a period of high inflation in 2022-3. He warns that in the US, inflation may be more persistent than the Fed currently anticipates. Additionally, In both the USA and the UK, there are concerns about public sector deficits and the UK may well face a major financial crisis in the next few years. Japan is in a somewhat position. Here, the quantity of money is actually falling, which will be negative for the global outlook. Overall, however, the prospect for the world economy is satisfactory, with no real reason to be concerned about a recession
June: US public debt, inflation and gold
In this video, Professor Congdon expresses his concerns about the significant increase in US public debt in recent years. Historically, the creditworthiness of the USA has resulted in significnt demand for US Treasuries, including from overseas buyers. However, there has been a decline in overseas enthusiasm for US Treasuries over the last 10 years and with yields at historically high levels, it may become harder to finance the current high level of spending by the US government. If the only buyer is the Federal Reserve (the central bank), this would result in significnat broad money growht and thus, inflation.
Given these concerns, it is hardly surprising that thie price of gold has soared in the last 50 years. It has become one of the most inflation-proof assets for investors..
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May: The surprise 2025 Q1 increase in UK GDP
In this video, Professor Tim Congdon offers a surprisingly positive assessment of the UK economy - at least one component of it - compared with some other commentators. UK exports of non-financial services are expanding at a rate of about 5% per annum. Before the Great Financial Crisis, financial services were recording strong growth but now the most dynamic part of the services sector is a range of business services, including legal services, accountancy and a range of consultancies - of which management, tax and engineering are the most important.
The UK is good at discovering new business areas and this has helped the economy to grow. The performance of the rest of the economy is rather disappointing; manufacturing is suffering from excessive regulation and public sector productivity has declined.
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April: Trump Tariffs: Great depression or just stagflation?
In this video, Professor Congdon dampens down fears that Donald Trump's recently imposed tariffs will result in a re-run of the early 1930s, when the Smoot-Hawley tariffs were widely blamed for the Great Depression. While arguing that protectionism does make a nation worse off, the big difference between now and the 1930s is that then, US broad money growth was falling whereas it is currentlygrowing, albeit at a modest rate. The biggest concerns about the US economy are firstly, that uncertainty about the rump administration's policies could lead to a loss of confidence within the busienss community and thus less bank borrowing, which would lead to slower broad money growth and secondly, the size of the US budget deficit.
In summary, 2025 is likely to be a challenging year for the world economy, but stagflation is a more likely outcome than a global slump.
March: Russia is NOT a super-power
In a change from commenting on monetary matters, here Professor Tim Congdon considers the size and make-up of the Russian economy. He points out that Russia produces less than 2% of world output and that this production is heavily reliant on basic energy (oil and gas, with some of it refined), raw materials and food, and low-value-added manufactured goods (iron and steel, fertilizers and aluminium). The Russian manufcaturing sector produces goods which are anything but state-of-the art and even its share of the global market for military hardware is falling.
February: The magic of free trade: a simple illustration
In this video, Professor Tim Congdon tackles the very topical issue of tariffs. He presents a forceful case for free trade, asserting that its benefits are very easy to demonstrate, both in theory and in practice. The new Trump government in he USA is doing itself no favours by ignoring the consensus in this matter by the economics profession.
January: Money and inflation in the mid to late 2020s
In this month's video, Tim Congdon looks at the world's leading economies comparing and contrasting the relative rates of broad money growth over three 3-year periods. He predicts that with the levels of increase being much lower in the years 2021-24, this should result in much lower inflation this year and next in the USA, Eurozone, UK and Japan. He explains that his analysis is based on the well-established principle that there is usually a lag of some 18-24 months between significant movements in broad money growth and their effect on prices. China too has seen weak broad money growth and will therefore also see low inflation. He mentioned India, the other economy covered in the money notes which go out with these videos. Here broad money growth has been stronger, but having a higher trend growth rate, there is no indication here either of any forthcoming surge in inflation.