We’ve been hearing about how the Royal Mint is printing a lot more £5 notes to replace the ‘grubby’ ones currently in circulation. At the same time, we’ve also just been told that people across the country are ‘hoarding’ £50 notes because they don’t trust the banks. Funny that these two stories have come out at the same time.

My friend Annie Shaw of Cashquestions.com doesn’t believe the hype. She thinks it’s a big spin operation from the government to cover the fact that they’re printing yet more money to keep the economy afloat. This is what she thinks:

The Bank of England claims that British consumers are hoarding their cash – literally. In a speech in Washington, Andrew Bailey, executive director for banking services, attributed a shortage of £50 notes to the UK population’s distrust of the recession-stricken banking system and a preference for concealing what little cash they have left under the bed.

The Bank also says it wants to get more £5 notes into circulation.

I don’t doubt for a minute that nervous pensioners whose local Post Office has closed during the Government’s axe attack on the network over the past two years are keeping more cash behind the clock. I find it entirely credible that the average drug lord or people trafficker prefers to deal in readies. And with interest rates at rock bottom, tax rates set to soar and banks and building societies tottering, maybe it really is better for ordinary citizens to keep their money where they can see it.

“Sustained low inflation has increased confidence in the real value of the currency, while more recently demand for banknotes has risen during this recession, and particularly for high denomination notes, reflecting loss of confidence in banks and very low interest rates,” Mr. Bailey is reported as saying.

It’s not just the banks we have lost confidence in. What we are losing confidence in is the ability of the Bank and the Government to keep a grip on the money supply, something that so-called “quantitative easing” has done nothing to restore.

As the Government struggles to devalue its debt, inflation is surely lurking just around the corner.

How convenient that we apparently “need” more banknotes in circulation. Just watch those printing presses roll!