Sour Mash

"Beat the VAT increase to 25%" maybe .... or spend your money while it still has value.

Slight difference between bringing in people to colonise a country and bringing in masses of foreign workers to suppress salaries or fill gaps where the locals won't do the work. As for the premiership, it becomes more like the WWF (or whatever they are calling themselves these days) business model of sports-themed entertainment each day. Why not bring a few more highly paid clowns in? After all most of the consumers, er I mean 'fans', have little idea of what constitutes real sport these days.

Yes, but the point of inflation is that your given amount of cash buys LESS goods than it would otherwise have. Inflation is a great way for the government to default on debt and indeed to impose a form of tax on everyone holding or earning money. If they can default on the sovereign currency through inflation (which hits the general public because of higher cost of living) then they can certainly default on PFI repayments in some form. They won't of course because those debts are owned by the already very rich and powerful who are well able to apply pressure, whereas the general public are more akin to a bunch of sheep.

The 'miracle' of inflation is that it devalues debt as well as credit (just two sides of the same coin). Given that the government is massively in debt and that this debt is largely denominated in a currency they control, it doesn't take an economics Einstein to figure out whether or not the government will print,debase and inflate.

Of course, the debtor can always stick two fingers up to the creditor and tell them that they're not going to pay or debase their currency to the point where the debt is worthless. This of course leaves the debtor open to the risk that the creditor takes action to recover their wealth. Now, which country has an absolutely massive military force and huge nuclear arsenal and could possibly get away with defaulting? If I were the Chinese, I'd be thinking very carefully about how long they want to be acting as slaves to maintain Western standards of living given that they are unlikely to get a payoff.

The aim of the game is to preserve the wealth of the rich elite, not that of the general population. In fact the general population is going to have to get (a lot) poorer in real terms so the rich can stay rich. Check out Bernanke's comments on using QE in the States to keep the stock market high.

They don't have to pass the full benefits on and won't of course, just enough to give workers the feeling that they are being compensated for inflation. It's what happened in the Weimar hyperinflation - currency debasement made German exports very competitive so industrialists were able to give German workers big rises but of course they never fully compensated for the inflation/debasement. End result - workers poorer in real terms (although earning massive nominal amounts of money), industrialists a whole lot richer in any terms you cared to choose. Inflation doesn't seem to bother the public too much as long as they get rises in their income. During Weimar, soaring inflation resulted in the heavily unionised labour force demanding (and getting) higher salaries not demanding monetary stability which is what they should have been fighting for. The same principle will likely keep lots of people happy even as their earnings shrink in real terms.

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I don't think that they can inflate fast enough to support nominal prices of things like housing. Especially since wage rises will lag the inflation. They can and will certainly send the cost of living through the roof (we can already see that starting to happen) which will likely make things 'worse' (i.e. better) for house prices. Eventually when salaries start to rise appreciably it will add some support to house prices and once inflation is properly roaring away (salaries as well as prices) with interest rates pegged stupidly low, it will be silly not to get into some sort of debt (preferably fixed interest) to buy assets. It's all a matter of timing. I'd give it about a 20% fall from current house price levels before the proverbial kitchen sink is ripped out and deployed in order to keep prices up. A return of MIRAS anyone? How about a UK version of FMAC?

Seconded. Cretins like him put all our liberties at risk.

I didn't attempt to pay in cash - I was merely reading the terms of sale in the contract I signed after putting down the deposit. They were very explicit on only accepting the deposit/up to 2k in cash. The full balance had to be paid by bank transfer 'to protect against money laundering' of course And good luck moving it back into the banking system if for example, you had taken it out to protect against bank collapse as you'll be asked to prove that you came by it legally - to the authorities satisfaction (no definition exists of what would actually prove it). If they decide you can't prove it, say bye bye to your money as it will be confiscated. Oh, and you'd better hope that if you decide to store your cash savings in somewhere like a safety deposit facility that the authorities don't decide to raid it and confiscate everything they find: Met. raid Finchley Road The bottom line is that you can't legally use physical cash to purchase anything more expensive than a couple of thousand quid these days and even holding more than a few thousand quid in cash can see it taken away from you with no proof required from the authorities. So if you have tens of thousands of quid of savings and can even get it into cash and store it safely (both from criminal theft and the authorities), good luck using it to do anything like buying a house or a car.

From what I can see, a lot of people are already struggling thanks to low wages, high costs of living and large debt burdens to service. Low interest rates have let them cling on a bit longer but the problem hasn't gone away. Inflation resulting from the low rates will take away their disposable income just as surely as interest rises would have done. The only thing that can save them now is wages rises and an improvement in the economy taking away risk of redundancy.

Not really - the price of the goods in dollars will rise to compensate for a falling dollar or they will switch to selling their resources in other currencies if the sellers perceive that the currency really is entering its death throes. The only benefit would be if people jumped into the pound as a 'safe' currency, making energy and commodities cheaper for us. More likely that the pound would go down with, or shortly after, the dollar IMO.

Those who say that wages cannot rise always forget that when the currency is debased, exporters have much more scope to award pay rises as they are selling in harder currencies. Then there's the massive public sector - plenty of scope there for the government to spend billions of freshly created money into the market. Of course, they don't want to pay more but once you have opened the money printing sluices and you are faced with crippling strikes (from people whose spending power has dropped as a result of your money printing) then it becomes a lot easier to print a bit extra and award wage rises. Those wage rises won't of course keep pace with inflation - history shows they never do - but a lot better to get a nice fat pay rise than see your fixed salary be worth less and less. Of course, the real beneficiaries of the printing are those with first access to the new magic cash and the strategy of printing is based on trying to make sure that those other than the likes of bankers don't also get in on the game of getting newly printed money (i.e. the general public). Printed money won't find it's way as easily to the rest of us but eventually it will get there. Those who'll see the flow from the money pump the last are those in industries servicing the UK internal market. And of course those living on savings won't get to see it at all.

Strange you should pick that example... I recently spent about that much on a new car and whilst the garage would accept up to a 2k deposit in cash they were clear (it's in the contract conditions) that they could accept no more than 2k in cash towards the car. Try buying something in excess of 10k, for cash, and see what happens. Even when just moving money between banks, when I went to the bank to set up the BACS transfer to the car dealership I was asked to state for what purpose I was moving (electronically) the money. I also can't transfer more than 10k at a time via eBanking without speaking to a representative of the bank and explaining why I am wanting to transfer more than 10k. The bank holds assets equivalent to about 5% of the liabilities to its customers and that's held mostly in assets, not cash. Going in and asking for 100k of your own money in cash means taking the money directly from their core capital. Something they do NOT want to do.

Suppose you have 100k 'saved' in the bank - what do you think your chances are of getting them to give you one hundred thousand pounds of legal tender cash notes (even with a week's notice)? Hint: Slim to none. They will offer to give you a couple of grand at most and transfer the balance to another bank. Physical cash and bank credit are NOT the same thing even though under normal circumstances they are treated as equivalent and fully exchangeable. Then of course you have the problem of what to do with all that money and how to actually spend it on anything more than minor, cheap things. Any attempts to spend large amounts of cash will see you fall foul of 'money laundering' laws.

Obviously whenever the deflation that you have been going on about endlessly kicks in.

Wow, just imagine how much money you can save by never buying then Just because you expect to take on less debt due to house price deflation (whenever you do buy)it doesn't mean that the day to day cost of living inflation is somehow offset. Also, more inflation in lower order consumer goods tends to imply less deflation in higher order capital goods (i.e. property). If you want to see really appreciable drops in house prices you wouldn't be cheering on consumer price inflation.

You need to get the difference between currency units and wealth straight. Currency is supposed to be a fair representation of wealth/production but only if the supply of money stays in proportion to the production it represents. Debts are taken on/issued in in fiat currency. All that is required to repay them are valid fiat currency. Doesn't matter whether that currency was earned through actual production, loaned into existence or flat out printed from thin air. The currency is valid because the authorities decree it is valid. The clue is in the name: FIAT currency. definition of fiat When you loan someone money the debt is only enforceable in fiat currency. When you swap your labour or an asset for fiat currency, that's it. Once you've 'bought in' to fiat then you accept the consequences that your 'wealth' or past production surplus is only worth as much as those in control of the currency allow it to be worth. Of course the consequences of printing your way out of trouble are pretty serious down the line but right now what matters to the powers that be is getting themselves out of the current mess. They believe that they can print just enough to extricate themselves from the massive mess they have created. And of course if all else fails, those running the show have plenty of chance to secure their wealth (and indeed, acquire more) as currency destruction runs its course. Just look at the history of the Weimar hyperinflation to see how those at the top benefited whilst everyone else saw their standard of living and savings wiped out.

It doesn't matter what the public think (not that many of them do) and it certainly won't make any difference which bunch of politicians get elected. The bankers own the politicians and money printing/ inflation/ currency debasementis in their interests so that is what we will get.

So, money supply has not shrunk whereas supply of goods/services almost certainly has shrunk. Therefore we are not having a deflation. Money and wealth have never been the same thing. You don't need to generate any real wealth to cover debts - just more monetary units. It's all just figures on a sheet. Of course, the people in credit get screwed by money printing but the banks will be more than happy to avoid going bust due to not getting their loans back as would otherwise have been the case and they can rake in ever larger shares of the freshly printed money as long as it keeps being printed. The wealth cake might be shrinking but money printing allows those with first access to the fresh cash (the big boys of finance) to acquire more of the wealth .. as long as people are willing to swap their production for what is increasingly looking like monopoly money of course. The whole point of measuring general inflation is to show how out of kilter money is at representing real wealth.

You heard it here first, folks ... ignore food inflation as you can grow food in your garden.

Ahhh but of course .. inflation is always 'temporary' and can thus be ignored. Are you Merv by any chance

Using the official metrics we've only had continuous deflation for four months back at the end of 2008. Based on 'the cost of stuff I spend my money on' then we most certainly are having 'inflation'. However, higher prices are just the symptoms of inflation whereas the strict definition is supply of goods and services vs supply of money chasing them. So - has the total money supply actually shrunk or grown? Has the amount of goods and services seeking buyers shrunk or grown? Look it up and then tell me if you still think we have deflation?

Here's another interesting article: http://www.newscientist.com/article/dn19653-are-we-having-another-food-crisis.html Not too hard to see what is happening to prices of essentials in the wake of a tide of printed money and government stimulus cash.