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the end is a bit nigher

Merv On Inflation

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Has everyone seen this already? Just seen the report during a bit of currency research.

Merv on inflation

edited because i can't spell the word 'bit' correctly!

We have been talking for months about how sentiment drives the property market, it sounds as if Merv has been controlling the primary source of inflation, pay rises, by managing sentiment about inflation with fiddled CPI data.

Even if the inflation due to fuel prices is only temporary he sees a risk that it may tip peoples sentiment about future inflation and start a cycle where they demand higher pay rises to compensate which of course will cause further long term inflation. He may hold out until next year but will then have to choose, support growth with lower interest rates, or tackle inflation and increase rates. Talk about a rock and a hard place B)

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i didnt even click the link.

why do i want to read the financial viewpoints of a person who lost control of nominal uk spending over 4 years ago, resulting in an ever increasing segment of the population being made either homeless or bankrupted. what kind of country is that ?

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i didnt even click the link.

why do i want to read the financial viewpoints of a person who lost control of nominal uk spending over 4 years ago, resulting in an ever increasing segment of the population being made either homeless or bankrupted. what kind of country is that ?

rightly or wrongly people tend to listen to people like him, lets not forget the mass cannot handle facts and figures.

Sentiment is the key and little indications like this help change sentiment.

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perhaps we listen to him here on this forum, and maybe the bbc pics out the bits it likes best. and possible GB acts on it. for me this guys a loser who no good at his job. yet he seems to think fit to draw a rewarding salary.

i myself pay the price of his financial mis-management every day i live in my small rented flat, while all around are empty suitable, but overpriced homes ready for extreme borrowing for no good reason other than to line the pockets of a few merchant bank cartels.

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I agree like many that inflation is understated. The central banks are still printing money like there's no tomorrow with the associated problems.

I did finally read tonight an article linked from another thread on Kondratief Cycles. This being the theory that economies operate on a 70 year cycle comprising '4 seasons'. We're now firmly in 'Winter', the season in which debt is purged from the economy in a massive deflationary depression. The last time this occured was 1929 and arguably all of the imbalances are significantly larger this time.

So my question is what is the prognosis? Inflation or deflation? Or is the current inflation of the banks own creation, trying to hold off the inevitable deflationary effects?

Would like to know as holding a fair bit of cash and there's a bit of a difference in dealing with the fallout from each.

Cheers to anyone who can help?

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If people find that their belief in price stability has been jolted, their expectations for inflation may become exaggerated. This in turn will make it harder to bring inflation back to target, he said

Exagerrated expectations? WTF is that all about? Try looking at the facts we're sitting on top of the biggest land/property/debt bubble in history and nearly every single person/company has to base their primary existance around have a base to live and work from. Meanwhile the raw materials and energy markets have been on fire as the central banks keep pouring gasoline on the monetary fire or does the head of the BOE not realise that money supply is growing at 10%?

TheChuz, you may be right, maybe it is better not to read this stuff in the first place.

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If people find that their belief in price stability has been jolted, their expectations for inflation may become exaggerated. This in turn will make it harder to bring inflation back to target, he said

Exagerrated expectations? WTF is that all about? Try looking at the facts we're sitting on top of the biggest land/property/debt bubble in history and nearly every single person/company has to base their primary existance around have a base to live and work from. Meanwhile the raw materials and energy markets have been on fire as the central banks keep pouring gasoline on the monetary fire or does the head of the BOE not realise that money supply is growing at 10%?

TheChuz, you may be right, maybe it is better not to read this stuff in the first place.

I think you have summed it up. Seems like after fighting the deflation of the stock/credit/housing bubbles with "more money" he wants to blame the masses for the resultant inflation.

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So my question is what is the prognosis? Inflation or deflation? Or is the current inflation of the banks own creation, trying to hold off the inevitable deflationary effects?

Imagine the crumbling Roman empire. You stand there with a handful of wafer thin adulterated coins with the emperors head stamped on them. And you ask yourself "I wonder if there's gonna be a bull market in these babies?"

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Lurker,

Good analogy. Still not clear to me though. The article I read was an interview with some guy called Gordon. He suggested that Cash and Gold would be the safe havens for deflation. This in itself seems contradictory as I thought Gold was a primary hedge for inflation. I guess he's suggesting it as a haven against complete financial collapse.

Haven't seen anyone putting more than 20 - 30% into gold. Where the hell do you put the rest?

Don't count myself as particularly slow but having trouble getting my head round some of the contradictions at present.

While I'm at it, I also have some oil stocks. Don't know whether they'll rise due to increase oil price or drop because the wider economy is going under. I'm going to buy a bloody house soon and try sleep at nights.

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I keep saying it, but it is looking like the 70's all over again, well 1969 anyway. Mind you that is better than 1929. :o Really don't want to go there again.

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Lurker,

Perhaps the contradictions come from the terminology because the last time such bubble like credit excess existed the monetary system was based on the gold standard. So gold and cash were the same, now they are very different. Also inflation used to mean an increase in the money supply not rising prices.

In the US in order to inflate the money supply to combat the credit collapse in the 1930s the gold was confiscated and the currency changed from gold certificates. These days money can be created out of thin air so there is no need to do this.

In general I think things that rely on debt, such as property, will decline initially. And things that rely on cash like commodities will increase in response to each money supply increase. Gold is now acting like a currency not a commodity. Its kind of like the "go-to" tangible asset. I know in the 30s commodities did not do well like they are doing now so the comparison is confusing.

Gold does extremly well in deflation because cash money does well in deflation and gold is money which the govt cant print. But cash money only does well if the govt is not creating too much of it.

Perhaps one key question is who does the govt, especially the US govt owe money too and how will they rip them off?

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Thanks for your views, Guys.

Regrettfully can't afford to put too much into Gold, need the cashflow.

Time for me to do some more reading.

Suppose an additional question is how fast could it all unravel. I know stocks can drop double digit in minutes but I would presume we would get indicators that cash was a dangerous spot to be in? By that time gold would be expensive and then I'm back to buying bricks and mortar despite the fact it too will have low intrinsic value.

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I think this is the BoE/Merv's usual subtle way of telling the market that the oil price is going to blow their IR predictions out of the water.

He is simply laying the groundwork for the next batch of interest rate rises.

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I think this is the BoE/Merv's usual subtle way of telling the market that the oil price is going to blow their IR predictions out of the water.

He is simply laying the groundwork for the next batch of interest rate rises.

Now there's an interesting one - at the last meeting the 5 muppets who voted for a cut should have been aware that this was going to happen, yet they seem to ignore it regardless - now if they are going to do that, what's to stop them doing it again at the next meeting - I know it would class as rank stupidity but I rank the cut as rank stupidity so that itself won't stop them - they can also play the 'inflation no higher than 3% card'

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  • 301 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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