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Si1

How Much Can Practical Inflation Run Above The Govt Index Before Investors Abandon Uk Bonds?

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If, as I believe will happen, over the next decade, inflation runs a bit higher than the formal govt index of inflation, by how much is this possible before international and institutional investors take fright and stop buying govt bonds?

I believe this happened when Argentina tried the same.

Edited by Si1

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The issue is whether and for how long international investors that Britain will be able and willing to pay its debts back. If serious doubt becomes established over either, then bond auctions will fail and the game will be over.

I suspect that certain people in high places realise this, hence Hutton's comments today and the Sunday Times expose of the Treasury's 'doomsday cuts' plan. The problem is that Gordon doesn't. I can only presume that international investors believe that grown-ups will be in charge as of June 2009, and are prepared to wait until then for evidence that we're going to start to balance the books. If that doesn't happen, we're even more sodomised than we are already.

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Guest absolutezero
If, as I believe will happen, over the next decade, inflation runs a bit higher than the formal govt index of inflation, by how much is this possible before international and institutional investors take fright and stop buying govt bonds?

I believe this happened when Argentina tried the same.

Surely it's been doing that for years.

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Surely it's been doing that for years.

I think so - but my question is - how much can be sustained?

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