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Mervyn King, Governor of the Bank of England, virtually admitted at his Inflation Report press conference this morning that the Bank now considers elevated levels of inflation to be perfectly alright provided they don’t give rise to second round effects – rising inflationary expectations and matching wage inflation.

http://blogs.telegraph.co.uk/finance/jeremywarner/100007260/the-right-type-of-inflation-is-ok-declares-bank-of-england/

These people are supposed to be economists.

For some time now myself and others have been projecting runaway consumer price inflation, especially in food, energy and fuel.

Just in the last week articles in various journals and newspapers have been telling us to prepare for that.

Today comes the admission that this is policy.

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Today comes the admission that this is policy.

The man has lost all credibility imo wrong so many times on so many occasions, he will continue to be so but hes probably right on this as hes just letting things go as they are and hope for the best, whilst his head is firmly in the sand.

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nonsense...he's just saving the forests...writing the same letter to the Chancellor every month, as we know costs £20 for a computer generated auto print, or £100,000 if written by a committee of theives.

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I see no reason to continue with this farce of having an inflation target when this BoE are consistently doing nothing to hit it.

I'd have more respect for him if he'd come out and said our policy is to continually rob savers and give the money to borrowers in the hope we can somehow keep house prices up and prevent the economy from going up in flames.

This guy is no better than a common thief.

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http://blogs.telegraph.co.uk/finance/jeremywarner/100007260/the-right-type-of-inflation-is-ok-declares-bank-of-england/

These people are supposed to be economists.

For some time now myself and others have been projecting runaway consumer price inflation, especially in food, energy and fuel.

Just in the last week articles in various journals and newspapers have been telling us to prepare for that.

Today comes the admission that this is policy.

Printy printy!

Oh wait that is not apt anymore it should be

Printy printy!Printy printy!Printy printy!Printy printy!Printy printy!Printy printy!Printy printy!Printy printy!Printy printy!Printy printy!Printy printy!Printy printy!Printy printy!Printy printy!Printy printy!Printy printy!Printy printy!Printy printy!Printy printy!Printy printy!Printy printy!Printy printy!Printy printy!Printy printy!Printy printy!Printy printy!Printy printy!Printy printy!Printy printy!Printy printy!Printy printy!Printy printy!Printy printy!Printy printy!Printy printy!Printy printy!Printy printy!Printy printy!Printy printy!Printy printy!Printy printy!Printy printy!Printy printy!Printy printy!Printy printy!Printy printy!Printy printy!Printy printy!Printy printy!Printy printy!Printy printy!Printy printy!Printy printy!Printy printy!Printy printy!Printy printy!Printy printy!Printy printy!Printy printy!Printy printy!Printy printy!Printy printy!Printy printy!Printy printy!Printy printy!Printy printy!Printy printy!Printy printy!Printy printy!Printy printy!Printy printy!Printy printy!Printy printy!Printy printy!Printy printy!Printy printy!Printy printy!Printy printy!Printy printy!Printy printy!Printy printy!Printy printy!Printy printy!Printy printy!Printy printy!Printy printy!Printy printy!Printy printy!

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nonsense...he's just saving the forests...writing the same letter to the Chancellor every month, as we know costs £20 for a computer generated auto print, or £100,000 if written by a committee of theives.

Nice post.........the problem is that the committee of thieves will pocket the £999.980 saved by sending the standard letter.

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The man has lost all credibility imo wrong so many times on so many occasions, he will continue to be so but hes probably right on this as hes just letting things go as they are and hope for the best, whilst his head is firmly in the sand.

10 years ago he actually wrote a fairly good economics book with sound economic principles in it. It's funny how he mentions how bad inflation is etc etc...

Its just a case of being paid huge bribes, every man has his price.

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http://blogs.telegraph.co.uk/finance/jeremywarner/100007260/the-right-type-of-inflation-is-ok-declares-bank-of-england/

These people are supposed to be economists.

For some time now myself and others have been projecting runaway consumer price inflation, especially in food, energy and fuel.

Just in the last week articles in various journals and newspapers have been telling us to prepare for that.

Today comes the admission that this is policy.

It's been implied policy since the day they stood up and said Northern Rock depositors would get 100%, and committed to print.

Before that it was merely inevitable from their massive failure to manage the money supply.

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It appears Mervyn King has now decided to stop treating us with contempt and come out clean about inflation. For the past four years he's been commenting on "immediate spikes of inflation with a tendency towards deflation in the medium term". Well, something along those lines. Remarkably, out of 52 months worth of forecasts, he managed to get it wrong 42 times. That is quite an achievement.

Except, I believe he has done this deliberately.

Bear with me on this one, please. If you decide to undertake a gigantic programme of Quantitative Easing (print money), bail out the banks (swapping their toxic assets for more printed money) and slash interest rates to the lowest level ever, you must choose your words carefully when you try to reassure everyone (Markets, People, Governments) that this is not the equivalent of planting the seeds of Hyperinflation.

I believe Merv knew all too well the Pound was going to lose some 25% of its value quickly, and possibly more, as well as the fact that importing inflation was inevitable and it would have to be managed somehow.

That's why you have a list of inflation forecasts that scream for vengeance. If you multiply the real inflation with the forecasted one, you'll see how much we have been impoverished by.

He has now admitted inflation will stay "somewhat high". Thanks for telling us. But do not be fooled by this. Watch his hands and do not listen to what he says, as the man is planning another massive round of money printing and further bailouts for financial institutions which have continued to operate as if nothing happened in the summer of 2008.

I expect the economy to hit the buffers again around Q1 next year, just in time for the 2011 bailout.

After all, the FED across the pond has already started.

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It appears Mervyn King has now decided to stop treating us with contempt and come out clean about inflation. For the past four years he's been commenting on "immediate spikes of inflation with a tendency towards deflation in the medium term". Well, something along those lines. Remarkably, out of 52 months worth of forecasts, he managed to get it wrong 42 times. That is quite an achievement.

Except, I believe he has done this deliberately.

Bear with me on this one, please. If you decide to undertake a gigantic programme of Quantitative Easing (print money), bail out the banks (swapping their toxic assets for more printed money) and slash interest rates to the lowest level ever, you must choose your words carefully when you try to reassure everyone (Markets, People, Governments) that this is not the equivalent of planting the seeds of Hyperinflation.

I believe Merv knew all too well the Pound was going to lose some 25% of its value quickly, and possibly more, as well as the fact that importing inflation was inevitable and it would have to be managed somehow.

That's why you have a list of inflation forecasts that scream for vengeance. If you multiply the real inflation with the forecasted one, you'll see how much we have been impoverished by.

He has now admitted inflation will stay "somewhat high". Thanks for telling us. But do not be fooled by this. Watch his hands and do not listen to what he says, as the man is planning another massive round of money printing and further bailouts for financial institutions which have continued to operate as if nothing happened in the summer of 2008.

I expect the economy to hit the buffers again around Q1 next year, just in time for the 2011 bailout.

After all, the FED across the pond has already started.

I agree with this.

I'm tempted to think "here comes the 1970s all over again" however there are a number of differences:

- Reliance on the state (e.g. council houses) - peoples' expectations are different this time around (or it the expectations are not different, they should be)

- Globalisation

I've believed and still believe that what is most likely to happen - and it's a highly dangerous course - is that the cost of basics will rise, such that if you take a household where the budget is split thus:

Mortgage 50%

Essentials 30%

Discretionary spending 20%

you'll end up with

Mortgage 50%

Essentials 55%

Discretionary spending 0%

before interest rates eventually and inevitably have to rise....

Mortgage 70%

Essentials 55%

Discretionary spending 0%

This apparently time-honoured nonsense spouted by economists that "there is slack in the economy, so inflation will be kept in check" would seem to me to only apply to discretionary spending.

I'm also reminded of the article a couple of years back now that stated that 1 in 5 (I think it was, back then) relied not only on credit to survive, but on ever increasing levels of credit.

Here come the strikes.

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I agree with this.

I'm tempted to think "here comes the 1970s all over again" however there are a number of differences:

- Reliance on the state (e.g. council houses) - peoples' expectations are different this time around (or it the expectations are not different, they should be)

- Globalisation

I've believed and still believe that what is most likely to happen - and it's a highly dangerous course - is that the cost of basics will rise, such that if you take a household where the budget is split thus:

Mortgage 50%

Essentials 30%

Discretionary spending 20%

you'll end up with

Mortgage 50%

Essentials 55%

Discretionary spending 0%

before interest rates eventually and inevitably have to rise....

Mortgage 70%

Essentials 55%

Discretionary spending 0%

This apparently time-honoured nonsense spouted by economists that "there is slack in the economy, so inflation will be kept in check" would seem to me to only apply to discretionary spending.

I'm also reminded of the article a couple of years back now that stated that 1 in 5 (I think it was, back then) relied not only on credit to survive, but on ever increasing levels of credit.

Here come the strikes.

Yep, almost the entire economy s going to get choked in the wallet. Now considering that pretty much every job created in the private sector in the utterly fake economy of the lasst decade was a service type job tied to discretionary spending then this would indicate that there is going to be a tidal wave of destruction of those jobs when this again fake route to prosperity and stability is pushed through.

The Bankrupt of England never saw the trouble coming and they have not one clue about what they are doing, they, like their political partners in crime are so far detached from reliaty that they will never know until it hits them square in the face.

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I agree with this.

I'm tempted to think "here comes the 1970s all over again" however there are a number of differences:

- Reliance on the state (e.g. council houses) - peoples' expectations are different this time around (or it the expectations are not different, they should be)

- Globalisation

I've believed and still believe that what is most likely to happen - and it's a highly dangerous course - is that the cost of basics will rise, such that if you take a household where the budget is split thus:

Mortgage 50%

Essentials 30%

Discretionary spending 20%

you'll end up with

Mortgage 50%

Essentials 55%

Discretionary spending 0%

before interest rates eventually and inevitably have to rise....

Mortgage 70%

Essentials 55%

Discretionary spending 0%

This apparently time-honoured nonsense spouted by economists that "there is slack in the economy, so inflation will be kept in check" would seem to me to only apply to discretionary spending.

I'm also reminded of the article a couple of years back now that stated that 1 in 5 (I think it was, back then) relied not only on credit to survive, but on ever increasing levels of credit.

Here come the strikes.

Well, these are the CLASSIC signs of the Austrian Economics BUST....High order items fall...houses and cars, and low order items rise...its to correct an imbalance.

course. they have tried to check the high order items fall with reducing the cost of purchasing said items....but this puts further pressure on the low order items due to inflation, currency fluctuations and tax rises.

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Well, these are the CLASSIC signs of the Austrian Economics BUST....High order items fall...houses and cars, and low order items rise...its to correct an imbalance.

course. they have tried to check the high order items fall with reducing the cost of purchasing said items....but this puts further pressure on the low order items due to inflation, currency fluctuations and tax rises.

:huh: It's just a list of stuff he's made up.

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IMO, it's about time they gave up on trying to manage monetary policy and instead left it to the free market.

How can you predict where CPI will be, where the very utterance of said prediction, can change the result? The only thing you can be sure of is, if you print lots more money, you will have lots more inflation (at some point - 2 years later in Weiner Rep. IIRC). This attempted micro management of people's expectations and responses is a fools errand.

Then consider that CPI includes VAT changes, genuine commodity price changes (bad harvests etc) as well and it makes it even less useful. As it doesn't include mortgage repayment costs, which would themselves change the CPI when interest rates were tweaked, it seems even more pointless - if interest rates mostly influence house prices, why would they not be central to this target?!

Then reflect on the stupidity of the 2% target at the root level. As no money is printed, the only way this target is going to be reached, is by ever increasing borrowing, with the burden of debt growing each time, with liquidity getting tighter and tighter. This should have been obvious to anyone designing the system and the target, but no... why not?

Finally, the whole concept of central planners deciding what the rates should be is flawed. How do they know? What if they are wrong? Why not let savers dictate the cost of borrowing, by virtue of supply and demand? Lots of savings to loan out => cheap loans. Little savings to loan out => expensive loans. This is self balancing and regulates itself. There is no need for some mystical central planners to do a bad job of second guessing this.

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Is there anyone that belives the inflation figures. They have been a lie for nearly 20 years now , with the whole purpose of keeping wages down .

The problem is in real terms apart form the pigs with their snouts in the troughs everyones money has dropped and they wonder why no one is spending any money ?

Answer they cannot afford to live any more.

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http://blogs.telegraph.co.uk/finance/jeremywarner/100007260/the-right-type-of-inflation-is-ok-declares-bank-of-england/

These people are supposed to be economists.

For some time now myself and others have been projecting runaway consumer price inflation, especially in food, energy and fuel.

Just in the last week articles in various journals and newspapers have been telling us to prepare for that.

Today comes the admission that this is policy.

Food prices fluctuate with wheat and fuel prices... wheat has gone through the roof and oil is back up too as with other commodities.

Your post looks like it is trying to link QE - money printing - with the price of food (included in CPI) which is misleading.

As stated above the price of food is increasing because of:

A. Speculation (wheat prices have rocketed on rumours of various crop failures around the world)

B. Ever increasing demand across the world for food (especially meat)

C. Currency weakness (as we to import our food because we are idiots)

This will only get worse and we will have to fight for food / water with increased prices / force unless the population of the world suddenly decreases (which it won't) or new ways to produce food more efficiently so as to affect supply/deman ratio

Edited by MinceBalls

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Just so as people don’t jump on my back accusing me of some sort of QE sympathiser; printing money and all the other daft schemes will lead to inflation (hyper even) but then every monetary policy in the last 30 years will also. I am saying ‘I told you so’ about monetary policy (printing money) causing inflation in items which are derived from wheat and oil are not correct… they have their own inflationary pressures as described and are subject to massve price fluctuations (track wheat over the last 5 years and you can see why food prices change)

If / when hyperinflation comes is when the printed money finally finds its way into M (as described by other posters) then you’ll know about it.

Until then this is simply an amuse bouche of inflation.

Edited by MinceBalls

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:huh: It's just a list of stuff he's made up.

thats fine...Merv and the Exchequer do it all the time....its called forecasting.

Austrian Economics predict the trend from a sound money basis.

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Just so as people don’t jump on my back accusing me of some sort of QE sympathiser; printing money and all the other daft schemes will lead to inflation (hyper even) but then every monetary policy in the last 30 years will also. I am saying ‘I told you so’ about monetary policy (printing money) causing inflation in items which are derived from wheat and oil are not correct… they have their own inflationary pressures as described and are subject to massve price fluctuations (track wheat over the last 5 years and you can see why food prices change)

If / when hyperinflation comes is when the printed money finally finds its way into M (as described by other posters) then you’ll know about it.

Until then this is simply an amuse bouche of inflation.

Assuming M is all money* (credit and base), you just need a rapid increase in V. There is plenty of M out there already, as it is the other side of the debt equation. As we know there is excessive of debt, we can safely say there are excessive levels of savings too.

MVT = PTT

M is the total amount of money in circulation on average in an economy during the period, say a year.

VT is the transactions velocity of money, that is the average frequency across all transactions with which a unit of money is spent. This effects availability of financial institutions, economic variables, and choices made as to how fast people turn over their money.

PT is the price level associated with transactions for the economy during the period

T is an index of the real value of aggregate transactions.

The only thing that needs to happen for hyperinflation to occur, is a panic and a loss of confidence in Sterling, causing a dash for assets. It only takes a spark, to start a forest fire.

The deflationists look at the lack of borrowing, causing M to decrease (on repayment). This is fine and true, but it can flip from deflation to the start of hyperinflation very quickly.

What the central banks are trying to do, is increase both M and V marginally, now that base money has been increased (avoiding bank failures). They want this money to stoke investment and growth, but if there is nowhere to invest or grow, this money may head to safe heavens, reducing the demand for money and causing others to follow. V rockets, as does P, so more follow... rinse and repeat.

* We know that the government will guarantee deposits of the 'too big to fails', printing as need be. Therefore, the distinction between bank credit and base money is mostly irrelevant.

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Yes, good post. I was working on the assumption deflation soon and then crippling inflation (hyper TBC) later and this will happen like you say 'suddenly'. That's my thoughts on what might happen.

My point for now was that I don't think the recent rather large increases in wheat and oil derrived things is anything to do with monetary expansion as is implied (by the OP) in the dig at the BoE in relation to food price inflation.

Assuming M is all money* (credit and base), you just need a rapid increase in V. There is plenty of M out there already, as it is the other side of the debt equation. As we know there is excessive of debt, we can safely say there are excessive levels of savings too.

MVT = PTT

M is the total amount of money in circulation on average in an economy during the period, say a year.

VT is the transactions velocity of money, that is the average frequency across all transactions with which a unit of money is spent. This effects availability of financial institutions, economic variables, and choices made as to how fast people turn over their money.

PT is the price level associated with transactions for the economy during the period

T is an index of the real value of aggregate transactions.

The only thing that needs to happen for hyperinflation to occur, is a panic and a loss of confidence in Sterling, causing a dash for assets. It only takes a spark, to start a forest fire.

The deflationists look at the lack of borrowing, causing M to decrease (on repayment). This is fine and true, but it can flip from deflation to the start of hyperinflation very quickly.

What the central banks are trying to do, is increase both M and V marginally, now that base money has been increased (avoiding bank failures). They want this money to stoke investment and growth, but if there is nowhere to invest or grow, this money may head to safe heavens, reducing the demand for money and causing others to follow. V rockets, as does P, so more follow... rinse and repeat.

* We know that the government will guarantee deposits of the 'too big to fails', printing as need be. Therefore, the distinction between bank credit and base money is mostly irrelevant.

Edited by MinceBalls

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Is there anyone that belives the inflation figures. They have been a lie for nearly 20 years now , with the whole purpose of keeping wages down .

The problem is in real terms apart form the pigs with their snouts in the troughs everyones money has dropped and they wonder why no one is spending any money ?

Answer they cannot afford to live any more.

Like I have said many times and I will repeat again and again for the stupid and feckless.

The government policy is INFLATION. That is their main source of money. The taxes they receive are a pittance compared to this hidden tax. The immigration policy is to support INFLATION. Every government policy like housing VAT etc all support INFLATION.

That is why austerity is BOGUS. There will be no mass layoffs. Sure some silly department will be cut a little here and there. But the main departments and budgets that support inflation will not be touched. They need mass immigration to continue. It is their way of keeping demand high and therefore prices high.

Austerity is propaganda to keep you quiet. No moaning about wages, conditions, immigrants, housing, taxes, etc etc. If you moan and complain we will tighten the screws down more on YOU!

Wakey Wakey!!

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Assuming M is all money* (credit and base), you just need a rapid increase in V. There is plenty of M out there already, as it is the other side of the debt equation. As we know there is excessive of debt, we can safely say there are excessive levels of savings too.

MVT = PTT

M is the total amount of money in circulation on average in an economy during the period, say a year.

VT is the transactions velocity of money, that is the average frequency across all transactions with which a unit of money is spent. This effects availability of financial institutions, economic variables, and choices made as to how fast people turn over their money.

PT is the price level associated with transactions for the economy during the period

T is an index of the real value of aggregate transactions.

The only thing that needs to happen for hyperinflation to occur, is a panic and a loss of confidence in Sterling, causing a dash for assets. It only takes a spark, to start a forest fire.

The deflationists look at the lack of borrowing, causing M to decrease (on repayment). This is fine and true, but it can flip from deflation to the start of hyperinflation very quickly.

What the central banks are trying to do, is increase both M and V marginally, now that base money has been increased (avoiding bank failures). They want this money to stoke investment and growth, but if there is nowhere to invest or grow, this money may head to safe heavens, reducing the demand for money and causing others to follow. V rockets, as does P, so more follow... rinse and repeat.

* We know that the government will guarantee deposits of the 'too big to fails', printing as need be. Therefore, the distinction between bank credit and base money is mostly irrelevant.

About time some sense was posted on this site.

Once velocity increases then Hyperinflation will be swift. All other hyperinflations occured after the velocity of money slowed to nearly zero.

Hyperinflation is coming.

Loaf of crappy bread a tenner. If you're lucky.

PS Don't worry about CPI or RPI or any other bogus stat. Bread will hedonically adjusted to be priced by the slice. So 25p a slice will sound cheap to the idiotic proles.

Edited by Mr. Spin esq.

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Like I have said many times and I will repeat again and again for the stupid and feckless.

The government policy is INFLATION. That is their main source of money. The taxes they receive are a pittance compared to this hidden tax. The immigration policy is to support INFLATION. Every government policy like housing VAT etc all support INFLATION.

They need mass immigration to continue. It is their way of keeping demand high and therefore prices high.

Interesting..... maybe this is why Japan with its incredibly strict you'll never get Japanese citizenship EVER even if you are born to Japanese parents overseas type arrangement. Explains as to why Japan has deflation, simply because there is no migration there.

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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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