Thursday, Dec 13, 2007
More inflation Vicar ?
BBC News: US factory prices at 34-year high
US factory prices have risen at their highest rate in 34 years, raising inflation fears at a time of interest rate cuts to help the wider econom
Posted by mrmickey @ 04:56 PM (345 views) Add Comment
3 Comments
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1. holding out said...
The Fed said that despite the latest reduction, it would "continue to monitor inflation developments".
Right that's inflation monitored, now where did I put my helicopter.
They target "core" inflation which seems to be all those products and services not going up. But of late even these are going up, so may I suggest they target only "core core" inflation which consists of House prices, flat panel TVs and iphones.
2. drewster said...
It's not all about inflation or interest rates! Japan had 0% interest for six years, and a stagnant housing market. As for inflation, during the 1988-91 boom & bust the average RPI was a whopping 7%. By contrast the average RPI from 1996-2006 was a tiny 2.6%. One might conclude that inflation is inversely proportional to house prices.
I suspect the late 80s / early 90s boom and bust would have been a lot worse if it hadn't been for inflation. It almost looks as if the government caused inflation in order to soften the blow, just as they are doing now. For anybody who is worried that inflation is eating into their savings but thinks gold is too risky, you could always try National Savings & Investments Index-Linked Savings Certificates. These are linked to the RPI (higher than CPI), they pay interest on top of the RPI, and they are tax-free too. Only snag is a minimum 3-year commitment. Some building societies offer even better deals - check out this article for more info: Telegraph: Stall the ravages of inflation
3. C'mon Correction said...
Ha haaaahhaaaa - you can but laugh.
This just highlights the stupidity of pumping extra money into the banking system and cutting rates when we've got record oil prices and a decade long worth of deflationary imported goods now going up sharply in price - just to keep over-inflated asset prices and stock market going and to try and delay a recession.
Perfect storm. This is just too funny.