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Stephen King: Inflation Fears Have Vanished – Suddenly It's All About Growth

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http://www.independent.co.uk/news/business/comment/stephen-king/stephen-king-inflation-fears-have-vanished-ndash-suddenly-its-all-about-growth-2293613.html

Earlier in the year, it seemed as though inflation was the big problem. In response, the European Central Bank raised interest rates. The hawks on the Bank of England's Monetary Policy Committee wanted to follow suit. And many investors thought that, before the year was out, the US Federal Reserve would do exactly the same. How things change. Suddenly, fears about inflation have vanished. The big problem now is growth. Surveys of manufacturing activity from around the world provide a consistently miserable message: the momentum of economic growth is fading. And while that's a welcome result in parts of the emerging world where inflation really has been a threat, it's a lot more worrying for nations in the developed world where recovery is still in its infancy. If the pace of expansion in the US and in many parts of Europe was already disappointing, the situation now is even worse.

On one level, this is all rather surprising. With interest rates more or less at zero, with massive budget deficits and with central banks throwing caution to the wind by turning on their printing presses, the amount of economic stimulus seemingly on offer is huge. So why hasn't it worked? Let me offer an analogy. Imagine it's been snowing and the roads are icy. You are driving up a hill. Close to the top, you have to stop at a junction. But when you attempt to move off again, you find that the wheels merely spin on the ice. You have no traction. The harder you try, the worse it gets. The car is stuck. You have plenty of power, but that power is totally ineffective. Eventually, you have no choice but to abandon your car. What follows is a long, slow and very cold walk.

Policy-makers have much the same problem. Their policies have little traction. Faced with large amounts of debt – either in the private sector or, increasingly nowadays, in the public sector – people are simply unwilling or unable to respond positively to the inducements on offer from central banks and governments.

The Keynesian "reset" – the idea that a big stimulus would allow an economy to "jump" from a high unemployment setting to a full employment setting – just hasn't happened. The clearest example of all this comes from the US. On Friday, we learnt that American employment rose a mere 54,000 in May and that unemployment had gone up to 9.1 per cent. Even worse for a nation with a long tradition of "fire and hire" – and, yes, I deliberately put the words in that order – many US citizens are struggling to find new work. The result has been an unprecedented rise in long-term unemployment.

More at the link.

I thought all the stimulus was about keeping the banks afloat not creating employment for the proles.

Luckily inflation has just vanished....

Although I though Keynes offered a one time only get out of depression card, not one that could be perpetually used.

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http://www.independent.co.uk/news/business/comment/stephen-king/stephen-king-inflation-fears-have-vanished-ndash-suddenly-its-all-about-growth-2293613.html

More at the link.

I thought all the stimulus was about keeping the banks afloat not creating employment for the proles.

Luckily inflation has just vanished....

Although I though Keynes offered a one time only get out of depression card, not one that could be perpetually used.

we all float down here, youll float too!!!!

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Well this is just stating the obvious really.

The solution to a crash brought about by too much debt can hardly be more debt.

The only way out now is biting the bullet and taking the pain.

Unsurprisingly, however, neither politicians, unions or the general public are too keen on this outcome.

:blink:

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What inflation fears?

We're in a depression - rates are still too high, which is going to be a problem what with a zero bound an' all.

Osborne's going to learn the hard way he's got this totally wrong - attempting to cut spending in the middle of a depression and with global demand slowing...........

Hopefully someone will point out his mistake and he'll have the good grace to implement Plan B before he causes serious damage but it's not looking too promising just yet.......Brown refused to admit he was wrong and that didn't end well either.

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What inflation fears?

We're in a depression - rates are still too high, which is going to be a problem what with a zero bound an' all.

Osborne's going to learn the hard way he's got this totally wrong - attempting to cut spending in the middle of a depression and with global demand slowing...........

Hopefully someone will point out his mistake and he'll have the good grace to implement Plan B before he causes serious damage but it's not looking too promising just yet.......Brown refused to admit he was wrong and that didn't end well either.

Brown drove the car off the cliff

Now it doesn't matter if Osborne stamps on the brake or the accelerator

The outcome will be the same either way.

Whatever anyone does - this is not going to end well.

:blink:

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This country needs some short term deflation to make it competitive on the world stage again otherwise we will stagnate for the next 10-30years ala Japan. Problem is the Govt cant gear itself up for deflation, its the Govt that needs growth otherwise its tentacles cant reach into more parts of one's life.

The economy is going to stagnate because government is taking too much money out of the economy and p*ssing it up the wall.

How much is Afganistan and Libya costing

How much is overseas aid costing

How much are EU bailouts costing

How much do we pay every year for the privelege of belonging to the EU

How much money is sent out of the country by migrant workers

These factors alone probably add up to over 30 billion a year.

And the list goes on and on.

:blink:

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Brown drove the car off the cliff

Now it doesn't matter if Osborne stamps on the brake or the accelerator

The outcome will be the same either way.

Whatever anyone does - this is not going to end well.

:blink:

It matters a great deal, despite your silly rhetoric.

There are more options of course than he's prepared to contemplate which don't help his cause.

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It matters a great deal, despite your silly rhetoric.

There are more options of course than he's prepared to contemplate which don't help his cause.

He's doing the only thing he can actually - which is talking tough and doing very little in the hope that 'something will turn up'

The irony is that Osborne and Cameron would dearly love to just carry on with the status quo created by Nu Labour, because under Nu Labour the rich got richer beyond their wildest dreams.

The only reason that they are having to try and do something is they know, if they don't, the country will go bankrupt.

They would love to tax and spend and rachet up government borrowing as this would be an easy solution

the problem is, this would just guarantee the economic collapse they are desperately hoping to avoid.

:blink:

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The economy is going to stagnate because government is taking too much money out of the economy and p*ssing it up the wall.

How much is Afganistan and Libya costing

How much is overseas aid costing

How much are EU bailouts costing

How much do we pay every year for the privelege of belonging to the EU

How much money is sent out of the country by migrant workers

These factors alone probably add up to over 30 billion a year.

And the list goes on and on.

:blink:

hello, this is all very true, but may I ask why your avatar and why do you revere the great Thatcher and Major years?

Did you live through those years?

I did and as a trained member of the engineering work force, I can tell you it was an extremely scary experience.

I am not defending New Labour at all, just pointing out that in my experience all the 3 main parties are essential the same, just looking out for their tribal comrades.

Meanwhile they destroy the economy at a faster rate than the poor souls working in it can build it up.

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He's doing the only thing he can actually - which is talking tough and doing very little in the hope that 'something will turn up'

The irony is that Osborne and Cameron would dearly love to just carry on with the status quo created by Nu Labour, because under Nu Labour the rich got richer beyond their wildest dreams.

The only reason that they are having to try and do something is they know, if they don't, the country will go bankrupt.

They would love to tax and spend and rachet up government borrowing as this would be an easy solution

the problem is, this would just guarantee the economic collapse they are desperately hoping to avoid.

:blink:

Why are they so desperate to avoid it? Who does it benefit? What will they achieve?

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hello, this is all very true, but may I ask why your avatar and why do you revere the great Thatcher and Major years?

Did you live through those years?

I did and as a trained member of the engineering work force, I can tell you it was an extremely scary experience.

I am not defending New Labour at all, just pointing out that in my experience all the 3 main parties are essential the same, just looking out for their tribal comrades.

Meanwhile they destroy the economy at a faster rate than the poor souls working in it can build it up.

I left school in 1978 aged 16 in a poor northern working class town.

I got a job as a low grade clerk and like all the other young people in the office bought my own house

When interest rates are high - houses are cheap and if you can afford the repayments when rates are 15% you can easily afford them at the historical average of 5%.

The 80's were the best decade my home town ever had - after 13 years of Labour prosperity it is a sh*thole,

same as virtually every other working class town in the country.

The 80's may have been 'scary' - people had to work much harder to make a living - but if you did work hard you could make a good life for yourself.

Now if you want a good life you emigrate.

:blink:

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Why are they so desperate to avoid it? Who does it benefit? What will they achieve?

Because, thanks to 13 years of Nu Labour, the status quo favours the wealthy.

And all politicians love to spend other peoples money, because it makes them very popular and ensures their re-election.

This is the strategy Nu Labour pursued - the trouble is the money ran out.

:blink:

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I left school in 1978 aged 16 in a poor northern working class town.

I got a job as a low grade clerk and like all the other young people in the office bought my own house

When interest rates are high - houses are cheap and if you can afford the repayments when rates are 15% you can easily afford them at the historical average of 5%.

The 80's were the best decade my home town ever had - after 13 years of Labour prosperity it is a sh*thole,

same as virtually every other working class town in the country.

The 80's may have been 'scary' - people had to work much harder to make a living - but if you did work hard you could make a good life for yourself.

Now if you want a good life you emigrate.

:blink:

How did your town do in the 90s?

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I left school in 1978 aged 16 in a poor northern working class town.

I got a job as a low grade clerk and like all the other young people in the office bought my own house

When interest rates are high - houses are cheap and if you can afford the repayments when rates are 15% you can easily afford them at the historical average of 5%.

The 80's were the best decade my home town ever had - after 13 years of Labour prosperity it is a sh*thole,

same as virtually every other working class town in the country.

The 80's may have been 'scary' - people had to work much harder to make a living - but if you did work hard you could make a good life for yourself.

Now if you want a good life you emigrate.

:blink:

right, now here lies the difference between you and I, I think we are the same age by the way.

anyway, I didn't leave school at 16 I did A-Levels and a degree in engineering.

you see in my view under Maggie, people such as yourself did do a whole lot better than people like me.

Now obviously I am biased, but you will probably consider my education a waste of money, I can however assure you it was extremely hard work.

So... I am extremely bitter about this era, Maggie gave money away to the working class and gave money away to the rich by selling everything and cutting everything she could lay her hands on, I lost out by getting what I consider to be a useful education.

Maggie destroyed what was a huge manufacturing infrastructure, yes there were the unions, yes there were bad designs, but these problems were not insurmountable with out a bit of investment and a bit of decent management rather than the war we effectively had.

The Germans and French with their 'fantastic' engineering prowess have stormed ahead of us while we just passed money around between ourselves making an easy buck on the back of someone elses debt. Doesn't look so clever now though does it?

Where exactly are all these fantastic efficient businesses and services that Maggie was doing it all for? You can't blame it all on the last 13 years, if you had it so good in the eighties it wasn't resulting from anything constructive was it.

As for the glorious Major economy that labour inherited and supposedly ruined, wasn't that just the mid stages of the great debt laden expansion? Yes labour carried on borrowing with a vengeance, but really they just carried on the Tory plan for the most part and then the bubble burst.

So here we are now, a tiny spec on the world economy yet we are happy to act as world policemen and generally telling everyone else what to do.

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Brown drove the car off the cliff

Now it doesn't matter if Osborne stamps on the brake or the accelerator

The outcome will be the same either way.

Whatever anyone does - this is not going to end well.

:blink:

Very well put.

There is no way out, the system needs to crash and then reset.

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  • 284 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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