V A T And Inflation

[mkz]

Didn't the increase from 15% to 17.5% fall out of the calculations at exactly the same time as the increase from 17.5% to 20% came in? In which case how can the BoE legitimately blame the recent increase in VAT for high inflation?

[Bear in mind]

You are right but the BOE are trying to say that when the VAT fell to15% many retailers didn't pass on the dicount.

It seems they also want us to believe all passed on the rise this year.

Do you buy it?

I don't, I can't afford it. Inflation is stealing from me.

[Prescience]

Well of course they cannot.

Economists (Real Ones: of which they seem to suffer a dearth at the B of E and more particularly sitting on the MPC), understand the realities of Fiscal Drag: which means simply that any change in a government's tax strategies takes significant time to filter through the macro-system and be seen to effect anything very much.

Additionally, "Inflation" is probably, one of the most abused words in the English lexicon.

It became a convenient and handy excuse, in the late 1970s, for those who were perhaps running a major public body: and politicians.

I well remember the muppet then presiding over Royal Mail in the early 80s, justifying price rises by the moronic (And unquestioned) answer to a BBC TV interviewer, of "In a word: inflation!"

True real inflation relates only and purely to the co-relationship between Money Supply and GDP.

Simply put: Too Much Money Chasing Too Few Goods = Inflation: whereas, Too Much Goods Chasing Too Little Money = Deflation.

Unfortunately, since about 1970 "Inflation" has become a nice word for covering up a combination of ignorance and incompetence.

If rising cost base creates inflation, per se, then the other essential rule of economics, Supply and Demand fails to apply.

As does the much vaunted mantra of most Western politicians since Reagan and Thatcher: The Free Market.

Since rising commodity prices do not inflation make, primarily, Mad Merve and his gang must carefully consider the real effects of QE and Fiscal Stimulus and the bank bailouts.

With fools, charlatans and rogues in charge of the country, its major and critical organs, then is it really any wonder the country is in the dire current mess we experience?

[interestrateripoff]

The inflation figures are all made up anyway.

Even then they still get the made up figures wrong and yet we are to believe the BoE can make effective decisions based on figures that are made up.