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Forget Qe, The Uk Needs Rate Rises To Fend Off The Threat Of Inflation

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Interesting analysis by Simon Ward of Henderson Global Investors

Basically, broad money is growing below average, but money velocity increasing more quickly than any time since 1980. So more QE could spark inflation spiral - BoE needs to begin raising rates now, not starting QE2.

I think this week's BoE meeting will be interesting - if we get more than one other member supporting Posen in voting for more QE (especially if Merv supports it), it will mean to me that any pretence of looking at the inflation target has been finally and decisively abandoned. On the other hand, if we get more support for Sentance in raising rates, there could still be hope for the BoE's credibility.

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I thought we all realised that months ago?

Have you noticed how all the portions are getting smaller? From packets of crisps to bath foam, slowly getting less for more. Its a joke and not taken into account in the inflation. Running at nearer 10% once you take these frauds into account.

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How is raising interest rates going to control inflation? If the cause of the inflation was domestic demand - fine, dampen demand by raising interest rates.

But if the cause of inflation, in a globalized economy, is a relentless rise in commodity prices caused by demand increasing dramatically in Asia, how is raising interest rates in the UK going to affect that?

As is so often the case, it looks as though economists, the financial media, politicians, the BOE etc etc. have everything exactly back to front. Also, in global commodity markets like wheat, oil, sugar etc - the price is massively influenced by options on futures contracts.

4 times global GDP is gambled every fortnight on currency exchanges - yet the idiots in charge think raising interest rates in the UK is going to control inflation. The banksters and hedge fund managers are the problem. Not interest rates.

Feckwits the lot of them.

Edited by Let's get it right

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Have you noticed how all the portions are getting smaller? From packets of crisps to bath foam, slowly getting less for more. Its a joke and not taken into account in the inflation. Running at nearer 10% once you take these frauds into account.

Yes I've noticed that. You open a packet of crisps and think 'wow, a dozen crisps'. Someone bought me a big cardboard (square) carton of chocolate buttons the other day. The carton contained little packets of chocolate buttons with about 25 buttons in each bag. Must have been 8 bags in there. Total amount of chocolate - about as much as you get in a small bar of chocolate.

We're being shafted from all directions.

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I thought we all realised that months ago?

Yep, we did.. but more than that the BOE announced they were doing this intentionally. Unfortunately it coincided with the Labour Party Conference (which is far more important <_< ) and largely went unreported.

http://www.thisismoney.co.uk/news/article.html?in_article_id=515595&in_page_id=2

I think the BoE will wait to see the effects of the VAT rise before reconsidering their position on interest rates.

Edited by exiges

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How is raising interest rates going to control inflation? If the cause of the inflation was domestic demand - fine, dampen demand by raising interest rates.

But if the cause of inflation, in a globalized economy, is a relentless rise in commodity prices caused by demand increasing dramatically in Asia, how is raising interest rates in the UK going to affect that?

As is so often the case, it looks as though economists, the financial media, politicians, the BOE etc etc. have everything exactly back to front. Also, in global commodity markets like wheat, oil, sugar etc - the price is massively influenced by options on futures contracts.

4 times global GDP is gambled every fortnight on currency exchanges - yet the idiots in charge think raising interest rates in the UK is going to control inflation. The banksters and hedge fund managers are the problem. Not interest rates.

Feckwits the lot of them.

Perhaps raising rates here will force other central banks to raise them as well ... ???

But the inflation can be caused as well by local increase in manufacturing output ... ???

Not an expert but 0.5% interest rates do not look very healthy to me .... should be the money really so cheap ????

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Yes I've noticed that. You open a packet of crisps and think 'wow, a dozen crisps'. Someone bought me a big cardboard (square) carton of chocolate buttons the other day. The carton contained little packets of chocolate buttons with about 25 buttons in each bag. Must have been 8 bags in there. Total amount of chocolate - about as much as you get in a small bar of chocolate.

We're being shafted from all directions.

Hey, don't be glum, there's a silver lining here. Hopefully this sort of thing, coupled with rising food prices, will have a positive effect on the attractiveness of British women. ;)

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How is raising interest rates going to control inflation? If the cause of the inflation was domestic demand - fine, dampen demand by raising interest rates.

But if the cause of inflation, in a globalized economy, is a relentless rise in commodity prices caused by demand increasing dramatically in Asia, how is raising interest rates in the UK going to affect that?

As is so often the case, it looks as though economists, the financial media, politicians, the BOE etc etc. have everything exactly back to front. Also, in global commodity markets like wheat, oil, sugar etc - the price is massively influenced by options on futures contracts.

4 times global GDP is gambled every fortnight on currency exchanges - yet the idiots in charge think raising interest rates in the UK is going to control inflation. The banksters and hedge fund managers are the problem. Not interest rates.

Feckwits the lot of them.

If we raised interest rates wouldn't sterling appreciate against the dollar thus making the commodities we import cheaper?

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Hey, don't be glum, there's a silver lining here. Hopefully this sort of thing, coupled with rising food prices, will have a positive effect on the attractiveness of British women. ;)

Dream on: they'll sulk about being unable to afford the latest Manolo Blahnik creations and settle for a paving slab of 30% cocoa solids, a settee and a DVD box set of satzy-too.

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  • 142 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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