Democorruptcy Posted January 13, 2011 Share Posted January 13, 2011 (edited) Agree Blue Peter, where were the fecking IR rises in 2005/2006/2007. I wonder how they came to this conclusion today having sat down around a table and discussed their obligation.......to keep inflation under 2%. Merv "Yes, we have to talk about this inflation issue. Davids starting to get edgy." Charles Bean "How much is my pension going up"? Merv "Shut it a minute Charles" Others.."But we need to keep the sham that is HPI going and keep people from defaulting" Charles Bean "Yes, but what about my pension"? Others "Charles, you have just had a £536,900 increase in the cash equivalent" Charles Bean "Yes but will our pensions be going up again to protect us against inflation"? Others "Of course they will Charles, stop worrying about inflation, you will be OK" Merv..."I've heard enough. Let's keep rates at 0.5% again this month. I'll write another letter telling David to keep his mouth shut." Others...."Agree........until next month then". Embellished for you. http://www.bankofengland.co.uk/publications/annualreport/index.htm Edited January 13, 2011 by Redhat Sly Quote Link to comment Share on other sites More sharing options...
Pole Posted January 13, 2011 Share Posted January 13, 2011 Haven't we seen it all before? (2001-2008) This time it'll be exactly the same. When the real hyperinflation problems start, some US (or EURO) bank will collapse, and everything will be blamed on America (or Europe). And then you'll see a talking head on TV telling the nation: 'No one saw this one coming'. Low IRs are great for banks as they can easily rip savers and mortgagees off. Why would the want to change it? And again, they don't have to worry about inflation as they're not going to get the blame (just like no one blamed the BoE and too low IRs for 2008). BTW, the UK government will never even try to harm banks' power and profit. Get real. This country (like any other developed country) is ruled by bankers not by politicians. Quote Link to comment Share on other sites More sharing options...
leicestersq Posted January 13, 2011 Share Posted January 13, 2011 It seems that the BoE don't even understand anything about controlling inflation so why on earth would you want to give them responsibility for controlling debt. Having said that the FSA are a waste of space and Cameron is going to get rid of them ... on no another Cameron U-turn up ahead. I am more positive on the Bank of England. Firstly, they warned extensively about the problems in the banking system before the financial collapse. Just to point out that they knew what was going on. Secondly the round of QE appears to me a stroke of genius. That fresh money devalued the pound, and has led to economic conditions in the UK be much more benign than in other countries. They also helped with the work on the bailout. Now their policy seems sensible in a way, to let inflation happen, and use it to help reduce the real value of all that debt out there. In theory, if you combine it with a new more rigid lending policy by the banks, you can reduce total real leverage in the economy gradually through loans being paid back, and where necessary default. Where they are going wrong is that inflation is now a too far out of control, they needed to have raised rates months ago. Their strategy also relies on the government to bring the deficit under control, and even to run a surplus. No sign of that. And it looks like peak oil and other constraints on commodity production is going to send inflation through the roof anyway. I dont see any way around that iceberg. We are all going to hit it very soon. Quote Link to comment Share on other sites More sharing options...
Pole Posted January 13, 2011 Share Posted January 13, 2011 ...the Bank of England's de facto target is the impoverishment of working people. Sounds logical to me. Why would the main bank that's been set up and controlled by bankers work for anyone else than the bankers? Quote Link to comment Share on other sites More sharing options...
Wait & See Posted January 13, 2011 Share Posted January 13, 2011 Embellished for you. http://www.bankofengland.co.uk/publications/annualreport/index.htm How true. Quote Link to comment Share on other sites More sharing options...
General Congreve Posted January 13, 2011 Share Posted January 13, 2011 I've lost count of the number of dog and pony shows we've had from the idiots at the BoE. They may as well be replaced by a room for of corpses... Come on Mr F, we both know low interest rates aren't all bad. Quote Link to comment Share on other sites More sharing options...
gf3 Posted January 13, 2011 Share Posted January 13, 2011 It seems to me the last 30year we in Britain have been living in la la land always consuming more than we produce. la la land has gone now and it's not going to come back. It doesn't matter now what the BOE dose with its rates. We are going to be poorer the pound in your pocket isn't going to buy as much ie inflation. When half the world lives on less than a dollar a day we are very lucky with the standard of living we have. Quote Link to comment Share on other sites More sharing options...
winkie Posted January 13, 2011 Share Posted January 13, 2011 It seems to me the last 30year we in Britain have been living in la la land always consuming more than we produce. la la land has gone now and it's not going to come back. It doesn't matter now what the BOE dose with its rates. We are going to be poorer the pound in your pocket isn't going to buy as much ie inflation. When half the world lives on less than a dollar a day we are very lucky with the standard of living we have. Quote Link to comment Share on other sites More sharing options...
martingale Posted January 13, 2011 Share Posted January 13, 2011 Some economics professor on the today program dispatched the BOE argument(s) quite effectively. (1) Claim: that inflation is external due to commodity price increases and beyond the BOEs control -> Then why do other countries have inflation lower than ours? (2)Claim: there is no wage inflation so no need to worry. ->Labour has been a falling component of output for years. You can still get run away inflationary spirals without wage inflation Quote Link to comment Share on other sites More sharing options...
leicestersq Posted January 13, 2011 Share Posted January 13, 2011 On the one hand you say "QE was a stroke of genius" supporting the devaluation of the pound with ultra low rates. On the other you speak of oil and food prices as though they were an act of God. Can you not link the easy money conditions with the incredible flows of liquidity into various investables before they sow the seeds of their own destruction by pricing out demand and sending the wrong price signals to farmers to sow the next year's crop or over invest in the extraction of minerals? The Central Banks are the root cause of the bubbles leading to food riots and starvation even, in poorer countries. Peak oil appears to be a fact. And growing demand from developing economies is pushing up food prices. That would have happened without bank intervention. Easy money, if placed on the table for too long, does lead to mal-investment, no doubt about that. I agreed with the QE pretty much from the BofE, but I also think that they should have started raising interest rates and tightening things six months ago. Mind you, if hot money flows into things like food production, expect large falls in the price of food next year. And I find the notion that Central banks cause all bubbles and food shortages. Was the Tulip Mania just a mania, or was there a central bank dozing away whilst the monetary spigots were left open? People have suffered famines and food shortages throughout history, no need for central bank intervention to make it so. Quote Link to comment Share on other sites More sharing options...
Butthead Posted January 13, 2011 Share Posted January 13, 2011 John Redwood seems to agree with many of the views on here: http://www.bbc.co.uk/news/business-12181692 Doesn't mention house prices though. Quote Link to comment Share on other sites More sharing options...
Democorruptcy Posted January 13, 2011 Share Posted January 13, 2011 I am more positive on the Bank of England. Firstly, they warned extensively about the problems in the banking system before the financial collapse. Just to point out that they knew what was going on. Secondly the round of QE appears to me a stroke of genius. That fresh money devalued the pound, and has led to economic conditions in the UK be much more benign than in other countries. They also helped with the work on the bailout. Now their policy seems sensible in a way, to let inflation happen, and use it to help reduce the real value of all that debt out there. In theory, if you combine it with a new more rigid lending policy by the banks, you can reduce total real leverage in the economy gradually through loans being paid back, and where necessary default. You are Adam Posen and I'm claiming my £5 Quote Link to comment Share on other sites More sharing options...
exiges Posted January 13, 2011 Share Posted January 13, 2011 Inflation is nothing more than legalised theft from the prudent to give to the feckless. Quote Link to comment Share on other sites More sharing options...
billybong Posted January 13, 2011 Share Posted January 13, 2011 (edited) Some economics professor on the today program dispatched the BOE argument(s) quite effectively. (1) Claim: that inflation is external due to commodity price increases and beyond the BOEs control -> Then why do other countries have inflation lower than ours? (2)Claim: there is no wage inflation so no need to worry. ->Labour has been a falling component of output for years. You can still get run away inflationary spirals without wage inflation Same point being made by Andrew Neil on the Daily Politics in a discussion about staggering inflation taking off for almost every consumer purchase but the BoE in denial about the levels of inflation and the base rate still not being increased - and also touching on the BoE's total lack of credibility. He also mentioned that other developed countries have much much lower inflation than in the UK. The US was mentioned (as one of many nations he listed) as currently having much lower inflation despite their low interest rates. Edited January 13, 2011 by billybong Quote Link to comment Share on other sites More sharing options...
longtomsilver Posted January 13, 2011 Share Posted January 13, 2011 Inflation is nothing more than legalised theft from the prudent to give to the feckless. Enoch Powell said something along these lines... being a form of tax. It's true, our house funds have effectively been taxed 30% since 2007. Quote Link to comment Share on other sites More sharing options...
@contradevian Posted January 13, 2011 Share Posted January 13, 2011 (edited) John Redwood seems to agree with many of the views on here: http://www.bbc.co.uk...siness-12181692 Doesn't mention house prices though. http://www.johnredwo...-and-inflation/ oh and on the MPC and BoE pension pot: http://www.johnredwoodsdiary.com/2011/01/09/some-little-numbers-from-the-bank-of-england/ Edited January 13, 2011 by Sir John Steed Quote Link to comment Share on other sites More sharing options...
gnosis Posted January 13, 2011 Share Posted January 13, 2011 Sounds logical to me. Why would the main bank that's been set up and controlled by bankers work for anyone else than the bankers? why does that banker look jewish? Quote Link to comment Share on other sites More sharing options...
exiges Posted January 13, 2011 Share Posted January 13, 2011 (edited) -> Then why do other countries have inflation lower than ours? The pound note has devalued, so you need to hand over more of them to get the same barrel of oil. It's no wonder the NS&I pulled their "inflation beating" products. Edited January 13, 2011 by exiges Quote Link to comment Share on other sites More sharing options...
Flatdog Posted January 13, 2011 Share Posted January 13, 2011 John Redwood seems to agree with many of the views on here: http://www.bbc.co.uk/news/business-12181692 Doesn't mention house prices though. I watched his interview on the BBC earlier today and he did indeed share many views with most on HPC. Must say that it did my soul good to hear such candid words from a politician. Will anyone listen tho' Quote Link to comment Share on other sites More sharing options...
Democorruptcy Posted January 13, 2011 Share Posted January 13, 2011 I watched his interview on the BBC earlier today and he did indeed share many views with most on HPC. Must say that it did my soul good to hear such candid words from a politician. Will anyone listen tho' http://www.johnredwoodsdiary.com/contact/ Quote Link to comment Share on other sites More sharing options...
happy_renting Posted January 13, 2011 Share Posted January 13, 2011 (edited) Enoch Powell said something along these lines... being a form of tax. It's true, our house funds have effectively been taxed 30% since 2007. Dunno about Enoch, but I came to the same conclusion recently and commented to this effect in another thread. Scenario A: 0% inflation, 3% tax, you start with say £100 savings, after a year your £100 is reduced to £97. The Government pockets the £3 tax. Scenario B, 3% inflation, 0% tax, you start with say £100 savings, after a year you have £100 but it buys what £97 would have bought a year earlier. The Government prints and keeps another £3. Same effect, and the government controls tax, and 'controls' inflation via interest rates. Edited January 13, 2011 by happy_renting Quote Link to comment Share on other sites More sharing options...
Arbitrage Posted January 13, 2011 Share Posted January 13, 2011 No they won't. If they raise rates, they would not risk printing. Just wait. It will have happened by the end of the year, no questions Base rates will still be well below 1% Got paper savings? Suck it up Quote Link to comment Share on other sites More sharing options...
Sour Mash Posted January 13, 2011 Share Posted January 13, 2011 The pound note has devalued, so you need to hand over more of them to get the same barrel of oil. It's no wonder the NS&I pulled their "inflation beating" products. But that's because we were on the verge of a 'deflationary death spiral' and no-one would need interest in order for their cash to keep its value Obviously the fact that we never actually had any inflation (using the Government's own chosen yoy CPI metric) and have in fact had above target inflation for over a year is entirely down to evil speculators and nothing whatsoever to do with the authorities creating hundreds of billions of quid of printed money and more or less giving it to the financial system to punt on commodities and the markets in general. Quote Link to comment Share on other sites More sharing options...
FreeTrader Posted January 14, 2011 Share Posted January 14, 2011 This morning’s Producer Price Index release shows a sharp jump in input prices in December. In the year to December 2010, input prices have risen 12.5%. http://www.statistics.gov.uk/pdfdir/ppi0111.pdf Quote Link to comment Share on other sites More sharing options...
ccc Posted January 14, 2011 Share Posted January 14, 2011 Dunno about Enoch, but I came to the same conclusion recently and commented to this effect in another thread. Scenario A: 0% inflation, 3% tax, you start with say £100 savings, after a year your £100 is reduced to £97. The Government pockets the £3 tax. Scenario B, 3% inflation, 0% tax, you start with say £100 savings, after a year you have £100 but it buys what £97 would have bought a year earlier. The Government prints and keeps another £3. Same effect, and the government controls tax, and 'controls' inflation via interest rates. Only up to a point. There are certain pressures they have little control of. Although yes I agree they should at least be trying !! It is apparently in their remit and their job. Don't appear to be very good at it though. Quote Link to comment Share on other sites More sharing options...
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