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Boe Decision 8-1

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Apologies if this has been posted before, but it seems Andrew Sentance has voted for an interest rate rise for the 3rd time this year.Poor love seems to think their remit is to tackle inflation. Who`s going to tell him?

They've learned their lesson: playing with meaningless inflation measures leads to disaster. Can't really blame the poor dears: they were only obeying orders, and it wasn't their place to ensure financial stability by pointing out the threat of rampant real inflation (money supply). Was it? :ph34r:

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Andrew Sentance needs a full stop (see what I did there...?)

We are in deflation. RPI and CPI just fell last month. Asset prices are falling. Oil is falling. Baltic Dry Index is at March 09 lows. US is practically admitting to deflation (0.2% CPI).

One of these days HPCers are going to realise we are not in inflation. I am using present tense for the semantics amongst you. Then when they all talk about the nasty deflation that will be the time they should be talking about inflation. Sometimes its just like The Sun here.

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Andrew Sentance needs a full stop (see what I did there...?)

We are in deflation. RPI and CPI just fell last month. Asset prices are falling. Oil is falling. Baltic Dry Index is at March 09 lows. US is practically admitting to deflation (0.2% CPI).

One of these days HPCers are going to realise we are not in inflation. I am using present tense for the semantics amongst you. Then when they all talk about the nasty deflation that will be the time they should be talking about inflation. Sometimes its just like The Sun here.

I honestly don't think that Sentance is serious. He is just put there to say (when it all blows up) "see we were not all idiots, we had meningful discussions". Bit like the Liberals were a few years ago. You can say owt if you know it's not really relevant.

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Andrew Sentance needs a full stop (see what I did there...?)

We are in deflation. RPI and CPI just fell last month. Asset prices are falling. Oil is falling. Baltic Dry Index is at March 09 lows. US is practically admitting to deflation (0.2% CPI).

One of these days HPCers are going to realise we are not in inflation. I am using present tense for the semantics amongst you. Then when they all talk about the nasty deflation that will be the time they should be talking about inflation. Sometimes its just like The Sun here.

Deflation is the cure, not the disease. The cost of living needs to fall to the point where markets clear when workers turn up with just their wages, not their wages plus an ever-expanding supply of credit to be repaid by the next generation (which as it turns out doesn't have the money either).

Also the RPI and CPI did not fall last month, they just went up less quickly than the month before. Consumer prices are still rising.

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Andrew Sentance needs a full stop (see what I did there...?)

We are in deflation. RPI and CPI just fell last month. Asset prices are falling. Oil is falling. Baltic Dry Index is at March 09 lows. US is practically admitting to deflation (0.2% CPI).

One of these days HPCers are going to realise we are not in inflation. I am using present tense for the semantics amongst you. Then when they all talk about the nasty deflation that will be the time they should be talking about inflation. Sometimes its just like The Sun here.

I generally err on the side of inflation (partly due to a VI in higher rates) but with commodity prices rising, crude is still above $70, wheat etc rising also it seems the way things are going. Also assuming the UK continues it's current rate of growth, I can't see mervs mythical spare capacity being enough to keep a lid on things, as there is no evidence of it having an effect so far.

So why is that you believe so strongly in deflation? The next leg down in the recession?

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Andrew Sentance needs a full stop (see what I did there...?)

We are in deflation. RPI and CPI just fell last month. Asset prices are falling. Oil is falling. Baltic Dry Index is at March 09 lows. US is practically admitting to deflation (0.2% CPI).

One of these days HPCers are going to realise we are not in inflation. I am using present tense for the semantics amongst you. Then when they all talk about the nasty deflation that will be the time they should be talking about inflation. Sometimes its just like The Sun here.

Interesting. If you read the minutes, you will hear that BoE has missed the 2% target for41 out of the last 50 months. Concern remain on inflation, not a single 'deflation' word was in the minute.

Further, there is absolutely zero deflation over say 3 years case since WW II, not even in Japan if you look at the stuff that people actually buys (excluding properties).

On the other hand, I can quote you a dozen of high inflation cases. Deflation with a paper currency with no intrinsic value and a central bank with inflation bias... I will believe it when I see it.

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Interesting. If you read the minutes, you will hear that BoE has missed the 2% target for41 out of the last 50 months. Concern remain on inflation, not a single 'deflation' word was in the minute.

Further, there is absolutely zero deflation over say 3 years case since WW II, not even in Japan if you look at the stuff that people actually buys (excluding properties).

On the other hand, I can quote you a dozen of high inflation cases. Deflation with a paper currency with no intrinsic value and a central bank with inflation bias... I will believe it when I see it.

Although they didn't actually use the word deflation they did say that inflation was more likely to be below target than above.... eventually...

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You need more reasons than those I gave? OK, so, on top:

Banks are not lending. £ is getting stronger. FTE unemployment is rising fast. China is slowing its growth big time. $ is on the biggest rise posibly in history, since 4 Dec 09. Right up to probably 100s on the USD index. Sovereign bonds are rising big time.

Still think we're in inflation?

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You need more reasons than those I gave? OK, so, on top:

Banks are not lending. £ is getting stronger. FTE unemployment is rising fast. China is slowing its growth big time. $ is on the biggest rise posibly in history, since 4 Dec 09. Right up to probably 100s on the USD index. Sovereign bonds are rising big time.

Still think we're in inflation?

I think deflation is define as decrease of the price of a basket of goods that most people buys. And of course we are now in an inflationary period - this is a fact as CPI/RPI are positive.

Whether we are in a +CPI (inflation) or -ve CPI (deflation) in 12 months time is what we do not know (and hence all the opinion).

In UK, I believe is that what you are saying are close to the truth but not the truth itself. Bank are lending, and loan book of some banks are growing (LBG flat, HSBC +4% from first half etc). I think another HPC member quoted that excluding financial companies, the M4 growth is 8% growth YoY. It is not as strong as the go go years, but lending isn't exactly collapse like in the US.

US/GBP 1.5 ish is just the historical average for the last 30 years or so, not exactly a big rise.

Now, what is important is that while there isn't huge monetary growth, capacities have been reduced voluntarily and involuntarily (many financial companies stop lending, so remaining has pricing power, Woolworth and many shops gone, so what are left have stronger pricing power. House builder internationally cut down building so that they can sell existing houses at higher prices).

You get inflation when there is more money than capacity. If money growth is flat and capacity is shrinking - you get inflation. And I think CPI will remain above 2% 12 months from now.

Japan experienced a much bigger property bubble than UK (the imperial square worth more than California etc) and yet a bigmac cost $2.33 back in 1990 and $3.54 in 2010 (Y370 in 1990 and Y332 2010. So there is a slight deflation in yen term, but that is like less than 0.5% pa and Japan actually export stuffs and so their currency is more valuable) and all when China was exporting deflation around the world.

In 2010, UK has a smaller property bubble, China cost is rising, GBP is a trade deficit country's currency.

BigMac (UK: $2.29 /£1.40 in 1990, exchange rate £1.63 to a dollar, 2010: $3.48 (about £2.24, I use 1.55 as exchange rate).

So, -ve CPI in 12 months, I don't think so.

Edited by easybetman

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You can define inflation as you wish.

But when HPs fall 20% pa and comm prop, when indivs go bankrupt at 140k pa and companies in the 000s, when stock markets fall 25-50%, and wages are hardly rising, I call that deflationary. And the bond mkt agrees.

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  • 145 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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