Thursday, May 15, 2008
Mervyn not very happy today!
Telegraph: Recession danger is real, warns Mervyn King
Mervyn King warned families to brace themselves for a further "squeeze" on household finances as rising energy bills and food prices continue to rise.
Mr King said that inflation was set to increase sharply to about 3.7 per cent - almost double the official target. As a result most British people will feel poorer this year as pay rises fail to keep pace with rising costs. The Governor - who said that "the nice decade is behind us" - also warned homeowners that property prices would fall further and that it was impossible to predict the scale of the decline. The British economy may now be heading for recession. Keep reading for even more glum news.
Posted by who stole my pension? @ 06:25 AM (554 views) Add Comment
7 Comments
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1. yoyo1 said...
Inflation to rise above 3%, that's the nurses out on strike then.
2. Dbc Reed said...
Mervyn King is reported as saying that most British people will feel poorer this year as pay rises fail to keep pace with rising costs.
We won't just feel poorer, you numpty: we will be poorer.
Thank God for that traditional feature of British life:" the first -class brain" i.e. someone of limitless intellectual conformism.
The last time we were faced with similar problems (and house-prices rose 70% in two years) ,the Unions stuck out for compensatory pay rises and the media chased after them snapping and baying at their heels over the hills and far away.Enoch Powell (whatever sins he was guilty of mindless conformism was not one of them) told his Tory supporters in 1970
"In the matter of inflation, the unions and their members are as innocent as lambs, pure white as the driven snow".
3. Ijjhall said...
No wonder the govt was so keen on rushing through 3 year pay deals meaning year on year pay cuts - union leaders are culpable too for agreeing to it all.
4. planning4acrash said...
Sh*t, I said that I'd try to avoid posting. But this deserves one. As we all should know by now, general inflation is far higher than stated. It is, always and everywhere, caused by an increase in the supply of money. The Government and Bank of England are in full control of the reported and actual figure because the Government determine the statistical measure and the Bank of England determine the money supply. For more info on this, look at the link to Mises Institute papers that I got put under the Read economic papers on the House Price Crash subject, link that is on the homepage.
Inflation is actually about 20 odd percent at the moment, it is always pretty damn close to M3 growth, what with producer prices up over 13% and oil rising at what appears to be 1% a week. Remember that, during the previous decade, M3 growth has correlated closely to actual RPI inflation plus house price inflation. In otherwords, house price inflation has been a device to allow M3 growth without causing strikes, because people can be fooled into believing that house price inflation is to their benefit. Even though it causes mortgage slavery and makes it harder to move up the rungs in the housing ladder.
Now that house prices are falling, real inflation will be M3 growth, plus a bit. This is precisely why oil could rise to $200/barrel within the year.
Returning the issue of striking? Yes, we all should be on strike. Why? Because inflation is a device to boost the balance sheets of banks and speculators. It causes the economic cycle of boom and bust. Destroys jobs via busts and via encouraging speculation and discouraging thrift and hard work. It destroys savings and pensions, earnings and disposable income. It makes houses unaffordable and reduces social mobility. It encourages greed, encourages mass fluctuations in migration, not for the purpose of discovering new cultures, but for the purpose of seeking money and hedging your position in the cycle, i.e. move from Poland the England when Poland is down, move back when England crashes.
and, it funds social programs, which mostly attempt to solve problems that are caused by inflation. Social housing to mitigate house price booms. Benefits to mitigate against loss of jobs and manufacturing during the economic cycle. Many socialist principles are positive and would be needed at a fraction of their current cost without inflation, but inflation also harms the necessary social projects, by ensuring that they increase in price year, after year, disproportionately, primarily because of all of the money pumped into them, made necessary by the inflation that was initially caused by debt.
Basically, debt being used as a tool against debt, causing yet more debt. It is a classic self-reinforcing system that reaches points of instability (recessions and depressions), from where structural changes are made, but the cycle repeats, slightly altered, but fundamentally the same. (Read Chaos by James Gleick to understand how systems work). Very important, because all things are systems, i.e. wholes made from the sum of their parts. They can be chaotic, as with our fiat monetary and out of control socialist system/military industrial complex. But all systems can also be self-balancing, self-regulating. Which is what I perceive to be the co-creation stuff that S2R refers to.
In the case of money, a 100% gold standard, with no fractional reserve banking is the self-regulating tool that the power structures have successfully fought against since the beginning of the industrial revolution. Gold supply is relative constant, it cannot be manipulated, so inflation does not exist. The USA constitution requires a gold standard, but this was taken from them after the Civil War, where a truce was made in return for allowing European Financiers to be in control of the money supply in return for "independence". That situation still exists. America had its greatest period of economic growth during its Gold Standard period. It had stability, and an economy that boosted the working class and expanded the middle class. If we return to the subject of class, we understand that inflation exists to boost the upper class and the banking elite, and the government and its cronies. It does so, not in isolation, so others have to suffer. The result is, the destruction of the working classes, who no longer are able to do much in the way of wealth generation, for themselves and society, and it destroys the middle classes. It does of course benefit the ruling elite to destroy the middle classes, who, eventually would demand reform whereby we have a libertarian future with power structures taken down and power redistributed to families and individuals. It is one of the reasons why the family is under constant attack.
Unfortunately we don't have a libertarian politician in this country to speak of. But change will of course have to come from America. We can however fight the EU project, which in its present form moves money creation from individual states to the European Central Bank monolith, which has a the power of a Federal Reserve and is no doubt run by the same people. Clearly, a Gold Standard transcends boundaries and could be a global currency, without exchange rates, without differentiation. One where, with stability, we could have free migration, etc. because people would not need to migrate for economic reasons (from the economic cycle), because there wouldn't be one. They would have to migrate as a result of famine, etc. but less of that would occur. Most places with famine are characterised by debt forming the majority of their GDP.
So, we need a libertarian model, founded on reform of money. Some say that it must require land and capital reform, but I doubt that necessary, because a gold standard would move us slowly towards an egalitarian future. However, all renters should have a right to buy, e.g. farmers on Prince Charle's HUGE estates, should be given a right to purchase the land at massive discount, based on the amount they and their ancestors have paid over the years. For those currently operating land and businesses to have a right to buy would avoid the destructive redistribution seen in Zimbabwe. This must be on a backdrop of socialist support of the minority who are economically inactive, the young, the old, the extremely poor, all supported by direct taxation, and not debt. Such a method would cut the tax burden by more than 75%. Needless to say, we must end unnecessary wars if we are ever to get a gold standard, because wars are almost always funded by debt, because the amount of tax that would be required to fund a war would almost always be rejected by the people. Instead, they get thieved the same amount via inflation.
5. theboltonfury said...
p4ac
i don't think anyone objects to you posting. I'm not sure that many people will be too happy you've chosen to write your own Post Doctoral Thesis and then paste it multiply all over the site. Kind of dilutes what I am sure is a valid opinion
6. inbreda said...
2. Dbc Reed said...
Mervyn King is reported as saying that most British people will feel poorer this year
I doubt very much whether Gordon Brown, Tony Blair, Mervy King, Blanchflower or in fact any of the other sh1ts will feel any poorer. This will probably be due to the fact that they won't be.
Go figure, eh.
7. Btl Rules said...
Glum Merv is a clueless fool, who only a few weeks ago forecast inflation would start falling end of this year and be around 1.5% next year. Also, energy prices which make up 0.25% of this months rise, increased in January, did the analysts not realise this when the forecast for this months figure was put in at 0.1%?
A truly dull individual, who thinks he is some of star in the making with his TV appearences.