Tuesday, Nov 17, 2009
Whatever happened to deflation???
BBC News: UK Inflation starts to rise
UK inflation has risen, official figures have shown. The core Consumer Prices Index (CPI) climbed to 1.5% in October, up from 1.1% in September.
Meanwhile, Retail Prices Index (RPI) inflation, which includes housing costs, rose from -1.4% to 0.8%
Posted by little professor @ 10:01 AM (2241 views) Add Comment
32 Comments
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1. mystie010 said...
Just in time for interest rates to rise to upset the new administration??
2. little professor said...
No way you'll get an interest rate hike before the election.
Here's the full inflation report [pdf]
http://www.statistics.gov.uk/pdfdir/cpinr1109.pdf
Highlights:
Upward pressures on inflation:
* Food prices rising even more than last year
* Recreation (particularly DVDs/computer games) prices rising
* Second hand car prices growing by fastest pace on record
* Communication (telephony) rising
Downward pressures on inflation:
* Petrol prices apparently fell by 0.7% last month
* University fees rising, but by less than last year
* Bank overdraft charges and house insurance falling
RPI is still negative, despite house price depreciation being reversed this year, because of lower monthly mortgage payments RPIX, which excludes mortgage interest, was up 1.9%
3. matt_the_hat said...
Our currency drops by 30% against the euro-zone our biggest trading partner and one which we run a trade deficit against and inflation goes up 0.1% (or something like that) this is a joke!!
4. tyrellcorporation said...
Labour are rapidly running out of fingers for the bursting dyke! I'm feel increasingly sorry for the incomming administration as they're picking up a debt-laden zombie economy allied to a broken society - great eh?
5. andrew said...
Don't be silly, you can't blame Labour for any of this.
6. cynicalsoothsayer said...
Are the bond markets pricing in an interest rate rise?
7. the number cruncher said...
Nulabour has been manipulated by the banksters and media barons and have let down the British people. They have taken the easy options that will result in inflation and stagnation and improved the lives of the poorest in society and our schools and hospitals with money generated by monetary expansion. They should have done this by taxing the wealth of the very richest, but instead they made a pact with them to ride the asset bubbles of debt based monetary expansion to live the easy life.
Now we have to pay the price, and the price will be inflation.
I will be fascinated to see if Bullingdon Dave and his cohort of Norman ruling elite has the Cahonies to do anything different to NuLabour except for cutting public spending a little (and I am sure it will only inconvenience the very poorest who never vote for his party anyway) I doubt he is up to cutting spending that will affect floating voters in the short term.
Dave is a old Norman who's family history is in banking and stock markets. He himself has done nothing else in his life but play the political game embroiled in spin and counter spin, his life's work has been in the completely virtual world , outside the real economy. None of this gives me any confidence in him addressing real economic priorities and getting the productivity of our economy back on track.
My worry is that Dave will let the ruling elite keep their assets and protect their value while, over the medium to long term, letting the working/productive population suffer the brunt of the forthcoming depression and inflationary chaos.
Dave could be the rank and file Tory voters worst nightmare, secretly putting in place polices that hurt hard working productive members of the population like me to the benefit of the asset rich non productive members of the population.
8. str 2007 said...
Sorry to repeat my post on an earlier thread, but it seems even more relevant on this one.
**Just Specced up a new Golf on the VW website - Ouch
£39,995
That's about 25% - 30% more than the last model.
I've also had cause to price up some Oak timber recently.
American White Oak is about £1700 m3
European Oak is now about £2700m3
European has always been a bit more than American despite the extra distance in shipping from the US, but not 60% more.
I think you might find this inflation animal is closer and going to hit harder than most imagine.
Tuesday, November 17, 2009 10:30AM **
9. britishblue said...
Number cruncher@7. Brilliant Comment! rather than the easy target of Gordon bashing it is good to see a grown up comment about just how big a problem we are in the UK and the lack of political ability from any party that gets elected to address this.
10. letthemfall said...
Agree with number cruncher and britishblue. There are a lot of silly political comments here. The essence of the problem is the growing inequalities as globalisation has given more power to capital - hence the continuous headlines about rising execs pay. Labour have failed to tackle this, but it would be a revelation if the Conservatives did any better; I would expect them to do a whole lot worse.
11. the number cruncher said...
Thanks britishblue - the level of debate on this site can be somewhat reactionary and it is nice to have a mixture of opinions with a little digging behind the surface blustering. I learn so much from factual posts and posts that give me new knowledge or new ways to understand the issues behind our political system and economy. People who post one line simplistic rhetoric should stop and think a little deeper, it would do them a lot of good.
We need to pull together if we are going to get through the forthcoming mess and the moderate left and right need to recognise the real enemies to economic progress. The monopolistic exploitation of private ownership of fixed assets is what caused the house price bubble and is the driving force of the inflation to come.
Assets must be devalued and we must tax (Land Value Tax and other taxes on non productive money expansion) unproductive work. We need to channel our endeavours to innovation and efficiency, role up our sleeves, work ourselves out of recession and learn the lessons of the lies and half truths peddled by the whole political system.
12. cynicalsoothsayer said...
There are three likely economic upheavals coming:
Chinese currency pegging will result in a trade war.
European bank losses cover-up will be exposed.
House prices will fall.
I don't see any government doing anything as radical as Land Value Tax. The strategy of the tax system is to get as much tax as possible without the taxpayers noticing. That means spreading it over as many different streams as possible.
13. the number cruncher said...
cynicalsoothsayer @ 12
I think that is a good practical summery - but
I think the trade war has already started and the USA and UK have been the worst offenders with a devaluation of their currencies starting a race to the bottom much like the Great Depression in the 30's. I see the UK/USA manoeuvres just as damaging as those of China. I am amazed at the double talk we hear from Brown, Obama and others, pontificating on how they would avert a damaging trade war, when they where doing exactly that.
Your right about taxation - I cannot see any politician party with the will and tenacity. What we need is a new Lloyd George and Winston Churchill who can pull together progressives and libertarians with a Bevin like rottweiler in the exchequer to implement sweeping tax and economic reforms - I can dream, can't I?
14. contrails are not a conspiracy (formerly npnh) said...
I stumbled across this quote last night... Thought it was interesting.
"A democracy cannot exist as a permanent form of government. It can only exist until the voters discover that they can vote themselves money from the public treasure. From that moment on the majority always votes for the candidates promising the most money from the public treasury, with the result that a democracy always collapses over loose fiscal policy followed by a dictatorship. The average age of the world's great civilizations has been two hundred years. These nations have progressed through the following sequence: from bondage to spiritual faith, from spiritual faith to great courage, from courage to liberty, from liberty to abundance, from abundance to selfishness, from selfishness to complacency from complacency to apathy, from apathy to dependency, from dependency back to bondage."
-Alexander Tyler
15. tyrellcorporation said...
@ Number cruncher, letthemfall and BritishBlue.
Here, here, Labour have done a bloody excellent job and by golly I hope they get in again to continue their sterling work. God forbid those evil Normans, sorry, Tories get in again to ruin it all.
Up Brown and hard working families and down Dave the Norman and his elitist Nazi hit-squads.
16. the number cruncher said...
tyrellcorporation @ 15
Are you being deliberately obtuse? - I am no fan of NuLabour and I doubt britishblue or letthemfall is either.
And when did I mention nazi's?
Your post is a typical 'straw man' argument. To hold on to your simplistic opinion you must morph any well thought out opposing view into something else so you can then deride it.
I think you show grow up
17. tyrellcorporation said...
Gimme a break, I'm only 9.
18. rumble said...
"learn the lessons of the lies and half truths peddled by the whole political system"
and yet we're still discussing labour vs tories.
"I don't see any government doing anything as radical as Land Value Tax"
Exactly, nor a change of similar depth in politics. We will continue to bounce back and forth between these two, each with their focus on big money and votes and gesture diversionary tactics on the public.
19. rumble said...
@TyrellCorp: So you're not a replicant?
20. tyrellcorporation said...
'Bullingdon Dave and his cohort of Norman ruling elite'
'Dave is an old Norman'
'secretly putting in place polices that hurt hard working productive members of the population like me to the benefit of the asset rich non productive members of the population.'
I'm no toff lover NC but this class war rant is pathetic.
21. tyrellcorporation said...
@Rumble.
Came off the line May 2000... I have burned so very brightly.
22. mystie010 said...
My prediction Feb/March interest rate rises!
23. the number cruncher said...
20. tyrellcorporation
Thank you for using a better argument to counter my posts
I feel honoured.. Please try not to use 'straw man' arguments, its very lazy and you will benefit far more if you do.
Yes, you have discovered my blindspot, I have got a massive chip on my shoulder. It is due to two things. Firstly I am the son of a mine engineer who went through the miners strike as a 15 year old. I still have the mental scars that conflict inflicted on my family. The other is due to my knowledge of rural economic history and as my 'business' deals with rural property and land purchase on a very large scale, I come across the vestiges of our Norman conquerors on a daily basis. You would be surprised at how much land is still in the hands of a few families descended from Normans.
Like tears in the rain...
24. letthemfall said...
number cruncher
That is true - about the Normans. The feudal system began after William defeated Harold and divied up the land to his mates; and their descendants still own much of the land. Whether DC is one I'm not sure, though I believe he is a distant relative of the Queen.
No point in arguing with tyrellcorp though. His prejudices get in the way and it descends into a slanging match.
25. 51ck-6-51x said...
The Number Cruncher
- I agree with much of what you say here, however, and this is no biggie, I would stipulate that capital investment is not necessarily not productive ( e.g. if I am asset rich and invest by building a new factory, say, even though I expect to sit on my ar5e whilst the coupons roll in it does not mean it's not productive. )
When push comes to shove all the problems come down to the fact that the political game is one where different groups steal ( legitimately ) from everyone else. Everyone is a member of many, many groups. Some groups are far far more efficient thieves than others and the vast majority of citizens are net losers in the game.
( As per the observation of contrails anac )
26. rumble said...
Tyrell, 9 years is well beyond the four year lifespan - no termination date? You're Rachael, and I claim my £5!
27. Jpdoyle said...
letthemfall said ... "Whether DC is [a Norman] I'm not sure, though I believe he is a distant relative of the Queen."
DC is an illegitimate* son of King William IV - younger brother and successor to George IV - he was the last king of the House of Hanover. His ancestor was one of ten children by the King from Irish actress Dorothea Bland (AKA Mrs. Jordan).
*the correct term was censured
28. the number cruncher said...
51ck-6-51x @ 25 I agree with you completely - I have a moderate economic knowledge and follow the work of Adman Smith and the classical economists, as well as the progressive movement.
I am not against any real economic activity and rich investors investing in real economic activity. They should get tax cuts and become wealthy - this is the way the world should work. I am a entrepreneur, of sorts, who has made a number of very successful multi-million pound ventures.
But people are people and once people have money, they look for short cuts to retain their wealth or make more money by being lazy and devious. This is bad and we need a strong state to regulate such dodgy economic activity.
I am only saying that the burden of taxation should be placed on rich people who invest in none economically productive activity such as speculation on land and manipulation of commodity prices, dodgy currency trading etc. We should tax non-earned income from capital gains where it is not helping our whole society.
The greatest danger to our society are those who seek to gain wealth through non-economic activity, such as monopoly or asset appreciation and that is the essential reason as to why we are in the state we are and why our house prices are so silly and why we are about to a very nasty does of economic reality.
29. rumble said...
"once people have money, they look for short cuts to retain their wealth or make more money by being lazy and devious"
Don't agree that it's once people have money, people without money do to, just that greater capital greater options, usually more complex, which is the austrian argument against the strong state you mention, because they can't process all the info they are bound to make a mess.
Don't agree with your monopoly and asset appreciation being non-economic bit either. Micro$oft as a monopoly would be bringing in foreign cash, sitting on an appreciating piece of art is not problematic. Needs such as food and housing, agreed.
30. 51ck-6-51x said...
Rumble
- You make some very poignant points as usual. Thanks.
The Number Cruncher
- I agree that if we have government then the tax take should indeed be progressive. However this does not happen, since the more wealth one has the more power for influencing decisions one has and hence things other than income tax more than offset it's progression.
Further exacerbation of this situation happens because a politician can earn the same from:
a) implementing a single new piece of legislation benefiting one special interest group at the expense of everyone else
b) removing multiple such pieces of legislation
but (a) is much, much easier than (b).
Hence I do not agree that "we need a strong state to regulate such dodgy economic activity", but rather that we need no state, and no central banking. I do concede that weak regulation is usually far worse than strong, but this is only because of the (a) vs (b) above, and that if government were composed entirely of saints then we would be fine.
See: The Machinery of Freedom by David D. Friedman; or have a browse around LibertarianAnarchy.com
Aside:
An original objectivist would go as far to say that altruism is the ultimate evil ( i.e. Ayn Rand ), but I believe this is a mistaken conclusion due to the ignorance of chains of actual and expected reciprocation, and that much of what we perceive as altruism is not really such e.g.: do I visit my elderly relative for her comfort or for mine? Is it evil for me to visit her if I do not expect to gain?
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