Sunday, Jan 11, 2009
Hyper Inflation, Hyper Inflation, Hyper Inflation
Daily Telegraph: Reform plan raises fears of Bank secrecy
The Bank of England will be able to print extra money without having legally to declare it under new plans which will heighten fears that the Government will secretly pump extra cash into the economy. News of this increased secrecy will spark comparisons with Weimar Germany and Zimbabwe. Savers face a double wammy with low interest rates and hyper inflation. Another one of Gordon's master plans to make us all dependant on the state and thus keep us voting for him. One day it will all end in tears... the longer it goes on the bigger the tears.
Posted by who stole my pension? @ 12:34 AM (1273 views) Add Comment
13 Comments
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1. whiteknight said...
Would that be stagnation with inflation?
2. stillthinking said...
Nadeem Wyalalt(maybe spelling on the last name) thinks so. He had a good article posted on marketoracle.
Has there ever been any government that managed to avoid the inflationary problems associated with quantative easing? A better way, although impossible sadly for GB for trust reasons, would have been to announce quantitive easing with a guaranteed soaking up later. The only problem with money printing is that after the crisis has past, there is very little reason to believe that any government will undo their actions.
Not good anyway. I don't see a boom coming from this. Poor old savers. Apparently even the pension funds aren't sufficient. Wealth must be transferred from your private savings accounts and the real value of your wage. oh sh*T, that second bit includes me!
3. mountain goat said...
IMO we will get inflation eventually from these actions but not this year. This year we have the economic crisis to follow the financial crisis. People losing jobs, losing wealth as house prices fall further and going bankrupt as they can't manage their debt repayments. In fear people will stop spending, hoarding what they earn. Inflation will probably go negative. This deflation will cause Central Banks to over-react and so we will get inflation starting next year or later. Because inflation will go negative don't pity savers too much! If inflation goes to -1% for example then even at 1.5% interest rates we will earn 2.5% interest on our savings.
As I have written before the only way the BoE can get money out into the economy is by giving it to gold bugs (or currency traders). They will not hoard their cash but buy gold with it (or Euros Yen etc). Everyone else, including banks, will simply hoard any money the gov prints now.
4. stillthinking said...
I don't pity the savers at the moment. I am anticipating a rush of sympathy later.
5. Steve said...
This was spotted by Guido Fawkes weeks ago...
6. Graham said...
I don't understand why there is such a big perceived risk of deflation. Although shops are lowering their prices today by cutting their margins, in an economy where we are a net importer of almost everything we desire and require, in particular energy and food, there seems to me an absolute floor by which the shops can lower their prices. If people refuse to buy anything at all above the basics, the prices cannot keep going lower since the cost to import them is fixed in real terms. Additionally, with a weakening currency, it seems to me costs in the shops are likely to rise as the wholesale price rises for the resellers. We live in a very different economy to the 1930's, where the UK was self sufficient enough for peoples deflationary fears to become self-fulfilling.
Given these factors, can someone tell me why there is such a panic over spiralling deflation?
7. paul said...
Yet again we see this rather odd reasoning that 'this time it's different'.
I hope this bill is roundly rejected. Any public organization being granted the ability to do anything it complete secrecy is deeply questionable, especially printing money.
8. Crunchy said...
1. whiteknight said...Would that be stagnation with inflation?
Yep! This cocktail is looking like Hyperstaginflation leading us into a depression.
I never bought the deflation bull for a minute.
Opens up a whole new can of worms. Print? I think savers are toast now!
9. str 2007 said...
Just a thought
Supposing someone had some savings and could qualify for a mortgage now, would they be better off going into the recession with a 200k mortgage costing say £5-600 per month interest only and putting say 75% of their savings into the house aswell.
Or
Keep the savings in the bank earning next to no interest with the prospect that in a year or 2's time having rented at £1000 pm not being able to qualify for a mortgage (due to unemployment/lower paid job etc etc.)
In normal circumstances it would be prudent to sit off and wait for prices to fall, but these aren't normal circumstances, money is cheap if you can get it, all support is being aimed at the mortgaged homeowner.
There is clearly an attempt (whether successful or not) being made to inflate debt (and savings) away.
If you get made redundant with a motgage there's support, but you won't get a new mortgage unless you've been in a job for 6-12 months.
Could you end up missing the bottom due to your own personal circumstances changing and not having the ability to get on the ladder ?
Justwondered if any of you had any opinions on this ?
10. paul said...
"Could you end up missing the bottom due to your own personal circumstances changing and not having the ability to get on the ladder ?"
Doubt it. You're getting sucked into this idea of the rebound being sharp. It won't be. Much much more likely it will be a bath curve, with a deep, long trough. In fact, if Japan's experience is anything to go by (and it appears increasingly that it will be), the recovery will not really appear at all, only stagnation followed by modest gains followed by stagnation etc.
If you can't get on the ladder, chances are neither can many other people.
11. Tqo31 said...
str 2007 @ 6.
I have been avidly following this site for over six months. If I have understood the implied shorthand of your user name correctly I, perhaps like you, sold to rent in 2007. I didn't do this for any reason other than the cost of the next move (with imminent arrival of first sprog) was prohibitive unless I was prepared to strap myself up for 7x salary... which I viewed as reckless being old enough to remember the pre '90 bubble.
Like you, I have been expressing the latter sentiments in your posting to my nearest and dearest, i.e. as absurd as it sounds, not being a mortgagee could peversely see me in a worse position if my employment circumstances were adversely affected.
The parallel fear is the spectre of the banked equity being savagely devalued when the effects of printing money come home to roost in say 12-18 months.
Despite bidding on a number of properties over the last 12 months in the region of 20-25% below asking i still haven't found any takers.
Do you have any views on moving cash into CHF being a safer haven than GBP?
12. inbreda said...
6. str 2007 said...
thing is STR, that the government is stealing our (savers) money by keeping interest rates low at a time when demand for money (and therefore the price of that money) should be high. So I understand your devils advocate question 'maybe it would be better to buy a house'. But the more obvious solution is to withdraw all of your savings from the bank. Doing this admittedly means that you are not even getting the poxy 2% interest on your savings and the government are stealing it quicker - BUT if you and I did this, it would not cause a run on the banks (As that is not the intention here), but I am sure in these troubled times they are monitoring their funds under administration quite closely. And if they notice them going down significantly, they will have to do something about it.
Unfortunately, that "something" is probably to go cap in hand to the government to get billions of pounds of our childrens money. But the point still needs to be made.14th Feb I empty my accounts. Whether anyone joins me or not.
13. str 2007 said...
Paul
Thanks for the response, as Tqo31 says below, you just can't help wondering if you'll be better off in the trough in your own place than renting - particularly with family, schools etc.
Tqo31
Re: CHF instead of Sterling, their have been a number of discussions on here about the various options, I'm certainly not qualified to advise you on that one.
I guess the City types on here may say Sterling has done it's dropping now and it's too late. Further a hedge into anything else with your house money is a gamble, unless you plan to buy a house in that currency.
Sold to rent yes but in 2004, d'oh. Saw it coming but too soon, failed to anticipate the stupidity of banks etc and people to keep borrowing.
Started posting here early 2007, used to post on a FT blog previously.
inbreda
I think JU's opinion of keeping the moeny moving as soon as their is an interest change is the best option. Not sure where I'd keep all my savings if not in a bank of some discription.
MAybe I'll do a big protest move for you on the 14th Feb.
(It's a Saturday BTW so make sure your banks open)!