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Injin

New Inflation Will Hammer Pensioners And The Low-Paid

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http://www.guardian.co.uk/commentisfree/2011/feb/20/new-inflation-hammer-pensioners-low-paid

It's no surprise that senior members of the coalition – from both parties – are worried about recent gaffes, U-turns and about being known only for massive public service cuts. They may be worrying, however, about the wrong thing. After the cuts, it is likely to be inflation that provides this and next year's biggest threat; and it is "new inflation", which is very different from the inflation that destroyed the reputation of old Labour in the 1970s.

Old inflation was said to be caused mainly by inflationary wage increases, made possible by a powerful and heavily unionised workforce that every year demanded higher rises in living standards for their members than any increase in productivity or company profits allowed. It rose to a peak of 26% in the mid-1970s under Harold Wilson and then Jim Callaghan; this was the inflation caused by industrial sclerosis on the one side and political weakness on the other. When Margaret Thatcher arrived to cage the unions and free the markets, though inflation rose under her to 20%, and had another spike during Nigel Lawson's boom, that "old inflation" problem was on its way out.

Now, we can argue about all this: many would suggest that fast rising oil prices and capital underinvestment by complacent industrial bosses had as much to do with old inflation as did militant unions. But this was the essential message driven into the skulls of British politicians and voters, right and left – the political narrative of the time. It scarred and changed Labour. Keeping a tight grip on inflation became a mantra of New Labour, as essential to its claims of newness as being pro-nuclear weapons or accepting council house sell-offs. Hence Gordon Brown's early announcement of independence for the Bank of England's monetary policy committee – something that astonished the political world and was one of New Labour's most memorable political coups.

Relations between the Bank and Labour were rarely easy but, partly because of the long economic boom caused by China's arrival in world markets, producing a seemingly endless supply of seemingly ever-cheaper goods, inflation ceased to be an issue. Now that same monetary policy committee is guilty of a massive mistake of prediction. The governor of the Bank, Mervyn King, said a year ago he thought the rise of inflation to 3% would be fleeting. By now, the MPC predicted, inflation would be around 1%. Instead it's 4%, way above target and on the way to 5% and again, according to King, it's the same story: inflation is basically just a blip, interest rates don't need to rise, don't worry.

Why, you may ask, has George Osborne not stepped in to remonstrate with the governor; or even demanded his head on silver platter? After all, political independence on interest rates was never unconditional. It depended on hitting targets, which the Bank (engaged in a furious internal argument about all of this) has failed to do. Welcome to "new inflation".

The reason Osborne hasn't acted, of course, is that although King has been so wrong about the numbers, he is right about keeping interest rates very low in order to help the stuttering economy. An interest rate hike would choke off the barely visible prospects for growth, leading to a new vicious circle of falling tax receipts and austerity measures – curtains for the coalition.

more at the link that somehow manages to not mention QE, bankers or labours debts at all.....

I've never seen revisionist futures before. :lol:

Quite heartened to see the comments section full of "money printing" stuff though. :)

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The current financial system appears to be in a death spiral, inflation will destroy everything.

Still at least the elites are deluding themselves into thinking they can have good and bad inflation, the worst inflation being that of satan himself prole wage inflation.

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New Inflation Will Hammer Pensioners And The Low-Paid everyone

May as well raise rates as only the debtors will be hammered (and rightly so).

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Thats ok, I know that being young, I'm ment to hate the old, but I owe everything to those who came before me, thank you.

You don't owe anyone anything. They did it for their own reasons, that you profit also is incidental. :)

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Makes me laugh that they excuse for not being on a sound/hard money system is that deficit spending (spending money you haven't got) helps the poorest in society and creates a more equal society. Tell that to proles and the OAPs who are getting unfairly hit by the rising regressive taxes and inflation that is trying to pay (ultimately unsuccessfully) for yesterday's government largesse.

A common argument against a gold standard is that the rich already have all the gold. Well the rich still seem to have all the fiat in the current system, look at the bankers with all their bonuses and tax payer bailouts. Who do you owe the 30-year serfdom mortgage on your one-bed in Slough too?

Surely a gold standard can work if fair progressive taxation is put in place to redistribute wealth fairly without being too punishing to high earner/high net worth individuals and a constitution exists to prevent governments stealing from the future to pay for votes today by getting the country in debt.

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You don't owe anyone anything. They did it for their own reasons, that you profit also is incidental. :)

Thats ok, I know that being young, I'm ment to hate the old, but I owe everything to those who came before me, thank you.

He might just mean he wouldn't have been born without them.

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He might just mean he wouldn't have been born without them.

The argument still stands - they didn't bear you for your benefit - They didn't even know you then.

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He might just mean he wouldn't have been born without them.

Exact same logic applies.

Unless you think parents have sex specifically to have exactly you, rather than for the pleasure of it.

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Exact same logic applies.

Unless you think parents have sex specifically to have exactly you, rather than for the pleasure of it.

caveat emptor

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You retire, you at first enjoy all that disposable income in the early years. Holidays to hot destinations, cruises, coach trips to rose gardens, and good food in the cafe of Haskins.

One blink of an eye, a few years later and you're struggling with bills, and the ever ominous council tax. You find yourself loitering with the rest of the OAPs in Asda at 7am for the reduced foods starting from 10p.

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Retail and leisure to get hammered more like.

My old situation (wife finally landed a short term contract)

One person on jobseekers the other tax credits.

£830 after tax for the monthly salary.

£40 Tax credits reduced from £45 due to JSA

£65 a week JSA from wife

Extra savings.

£145.50 No TV license

£15 a month in veg over the year (Allotment)

£27 a month (You could claim council tax 25%)

£1356.62 a month, you would need a pretty big hammer to dent that via inflation.

Edit: Rubbish grammar.

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Makes me laugh that they excuse for not being on a sound/hard money system is that deficit spending (spending money you haven't got) helps the poorest in society and creates a more equal society. Tell that to proles and the OAPs who are getting unfairly hit by the rising regressive taxes and inflation that is trying to pay (ultimately unsuccessfully) for yesterday's government largesse.

A common argument against a gold standard is that the rich already have all the gold. Well the rich still seem to have all the fiat in the current system, look at the bankers with all their bonuses and tax payer bailouts. Who do you owe the 30-year serfdom mortgage on your one-bed in Slough too?

Surely a gold standard can work if fair progressive taxation is put in place to redistribute wealth fairly without being too punishing to high earner/high net worth individuals and a constitution exists to prevent governments stealing from the future to pay for votes today by getting the country in debt.

saying the rich dont have it all is like saying the colour green isnt green.

Of course they have it all, regardless of the money standard....thats the definition of rich.

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Guest sillybear2

Has the penny finally dropped? Put it like this, Mrs Marr and friends don't have to worry about paying the gas bill, do they? That's what makes champagne socialists' indifferent attituide towards inflation so pernicious. They conveniently ignore the voiceless pensioners and the poor freezing to death due to the near hyper-inflation of the basics like energy, which are further levied to pay for the subsidised solar panels on rich peoples' homes.

Anyway, Merv feels your pain, in fact he doesn't, he's just nabbed another £1.4m of your money for his (inflation protected) pension pot. He's not stupid B)

New Labour, New Inflation?

Price increases without countervailing wage increases, what could go wrong? It makes Harold Wilson look saintly.

QE + ZIRP benefit insolvent bankers and bail out reckless debtors at the expense of everyone else, it's zero-sum, simple as. The rich don't want to eat their losses so you will... or won't, if food inflation is anything to go by. ;)

In Ireland they've just diced it up differently, inflation is slightly lower but your salary has been cut 20% in actual terms. It's the same outcome but slightly more honest and less regressive than the inflationary theft method.

You have to admire the unintended consequences of QE2, Bernanke has toppled more foreign dictators than Bush II, all without a single bullet being fired. That's true power.

Hi Injin :P

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£1356.62 a month, you would need a pretty big hammer to dent that via inflation.

You're rich. Like most Brits, including (most of) those described as 'poor' by the Bleeding Hearts. You can afford the basics and have a decent amount left over for your choice savings and luxuries.

Perhaps we need to move the distinction between rich and poor away from how much you earn and onto how much you spend.

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You're rich. Like most Brits, including (most of) those described as 'poor' by the Bleeding Hearts. You can afford the basics and have a decent amount left over for your choice savings and luxuries.

Perhaps we need to move the distinction between rich and poor away from how much you earn and onto how much you spend.

Exactly it all comes down to debt, no debt no problem. From the point of view of the low paid worker with low debt there is still a lot of fat left in the wallet.

worryingly one of my aspiring middle class friends could not grasp debt is a pay cut.

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  • 312 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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