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If Policy Isn't Inflationary, I'm A Banana

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http://www.cnbc.com/id/37700458

If Policy Isn't Inflationary, 'I'm a Banana': Economist

Published: Tuesday, 15 Jun 2010 | 6:17 AM ET

By: Patrick Allen, CNBC Senior News Editor

Inflation has been rising fast in the UK, with a big budget deficit and the Bank of England's quantitative easing policy being blamed by some analysts for it.

Data released Tuesday showed a weaker than forecast rise in inflation for May, of 3.4 percent year-on-year, but some believe this will not last.

Liam Halligan, the Chief Economist at Prosperity Capital Management has been worried about inflation for years and warns investors it could get worse from here.

"This really is economics 101… We're running a budget deficit of 12-13 percent of GDP, if that's not inflationary I am a banana," Halligan told CNBC.

"Inflationary expectations start to spiral once inflation is above a significant level," he added.

Bond investors know this and are very worried about the health of Britain’s finances, Halligan warned.

"The budget deficit in the UK is set to double to £1.5 billion by 2015 and the bond market knows this," he said.

While the new coalition government is working on cutting the deficit, the problem is the total size of the debt, according to Halligan.

"Britain’s tax base is weak as financial services, North Sea oil and the housing market are under considerable pressure," he explained.

The bond market is being held up by the banks who, Halligan said, are being forced by the government to buy Gilts in return for the support they got after the financial crisis.

"The whole market knows the British Government has to unload an unprecedented amount of Gilts," he said.

Some of you are too young to remember the kind offer made by Idy Amin in the 1970s - the last time the UK had structural problems. Clearly, this guy doesn't know what the offer was:

http://uk.answers.yahoo.com/question/index?qid=20100424042130AA7MLJx

As an exercise for the reader, see if you can find out <_<

Edited by AvidFan

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http://www.cnbc.com/id/37700458

If Policy Isn't Inflationary, 'I'm a Banana': Economist

Published: Tuesday, 15 Jun 2010 | 6:17 AM ET

By: Patrick Allen, CNBC Senior News Editor

Some of you are too young to remember the kind offer made by Idy Amin in the 1970s - the last time the UK had structural problems. Clearly, this guy doesn't know what the offer was:

http://uk.answers.yahoo.com/question/index?qid=20100424042130AA7MLJx

As an exercise to the reader, see if you can find out <_<

You are clearly wrong, the new economic paradigm says:

if prices go up = deflation

If money is printed = deflation

If QE causes deflation.

Wages go down but the cost of everything stays the same = deflation.

There is no such thing as deflation, Zimbabwe, Yugoslavia, Argentina etc were all examples of hyperdeflation.

:D

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"The budget deficit in the UK is set to double to £1.5 billion by 2015 and the bond market knows this," he said.

Things would appear to have improved dramatically over the past day or so.

p-o-p

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You are clearly wrong, the new economic paradigm says:

if prices go up = deflation

If money is printed = deflation

If QE causes deflation.

Wages go down but the cost of everything stays the same = deflation.

There is no such thing as deflation, Zimbabwe, Yugoslavia, Argentina etc were all examples of hyperdeflation.

:D

What of the fiscal squeeze? http://europe.pimco.com/LeftNav/Global+Markets/European+Perspectives/2010/European+Perspectives+Mike+Amey+Discusses+PIMCO’s+Secular+Outlook+for+the+UK.htm

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  • 261 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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