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RichM

Don't Read This If You Have High Blood Pressure

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Opposed by four powerful headwinds, the economy staggers towards trouble

See if you can spot:

i) the near-complete about-face regarding the prospects of the economy at large

ii) the total failure to acknowledge that we've been on an 8-year debt binge

iii) the obscene call for "lower IRs now!"

This paragraph is a complete gem:

One was his foolish decision to change the official inflation target to a new euro-harmonised measure that overstates energy costs and completely excludes house prices. As a result, inflation is now well above its official target and rising fast, making it difficult for the Bank to justify lower rates. Had Mr Brown resisted the temptation to fiddle with the statistics, the official measure of inflation would still be below target and the Bank would find it much easier to cut rates.

:angry:

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Opposed by four powerful headwinds, the economy staggers towards trouble

See if you can spot:

i) the near-complete about-face regarding the prospects of the economy at large

ii) the total failure to acknowledge that we've been on an 8-year debt binge

iii) the obscene call for "lower IRs now!"

Had Mr Brown resisted the temptation to fiddle with the statistics, the official measure of inflation would still be below target and the Bank would find it much easier to cut rates.

[Comment removed by moderator]

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Had Mr Brown resisted the temptation to fiddle with the statistics, the official measure of inflation would still be below target and the Bank would find it much easier to cut rates.

That is nonsense. Inflation is much HIGHER than the new measure indicates. Kaletsky, methinks you have a BTLski.

Edited by gone west

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That is nonsense. Inflation is much HIGHER than the new measure indicates. Kaletsky, methinks you have a BTLski.

No, he's 100% correct, and it's you who is talking nonsense. The previous inflation target was for RPIX to be at 2.5%, plus or minus 1%. RPIX is currently at 2.3% and falling, below the midway point of the previous target.

And here's a quotation for you from the Bank of England's website (my emphasis), "It is generally recognised that the true level of inflation is usually below the rate of inflation recorded by a measure like the CPI - it overstates inflation to a small degree."

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If house prices were included in the index, then inflation would now be lower than the official index, but obviously it would have been much higher in previous years, menaing IRs would have been higher and we wouldn't be in this mess.

To be honest I see this article as something more sinister. I suspect GB wants to put house prices back into the index as he knows they may fall, and thus ensure that interest stay the same or go down.

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So after coming out with over optomistic, blinkered claptrap for years, Kaletsky finally wakes up.

He has no credibilty left.

You are right Rich - not good for the blood pressure. :angry:

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And here's a quotation for you from the Bank of England's website (my emphasis), "It is generally recognised that the true level of inflation is usually below the rate of inflation recorded by a measure like the CPI - it overstates inflation to a small degree."

Hadn't the CPI figure been below the RPI for a long time since it's introduction - and it is only recently that the CPI has risen to "catch up" ?

I have a problem with criticism of the inflation measure because it doesn't suit their agenda, which is to lower Interest Rates and desperately try to avoid a house price crash.

Gordon Brown and the BoE have made their bed, and now they have to lie in it.

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If this is overly simplistic..

Its because it is..

Inflation ha been low.

Yes, house prices and tax have been removed from the figures.

and at todays costs these two items have increased in costs to the sum of hundreds of pounds a month..

Think about that.. hundreds of pounds..

So inflation has been low... yes it has.. because there hasn't been enough money left for anything else to get more expensive.. infact all other expenditures that go toward measuring inflation are competing toward a smaller pot.

all governments change the measure of inflation to best conceal the way they are Fu**ing it up..

we all know that..

They know we know that..

They also know that we know that they no that we know that..

People don't moan.. because for the great part a lot of people percieve themselves as richer..

for the time being at least...

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Had Mr Brown resisted the temptation to fiddle with the statistics, the official measure of inflation would still be below target and the Bank would find it much easier to cut rates.

That's not true, RPI-X has almost always been in excess of CPI and last month was in the region of 2.7% though now falling (oh the irony), so that wouldn't have helped matters at all, if we were still on RPI rates would now be 5.50% and true inflation much lower, the housing bubble would never have been allowed to happen. No doubt there's an impending cooking of the books and the goal posts will be changed again to allow house price deflation to skew the new measurement down.

Though it seems like the journo is confusing the CPI 'core rate' with old school RPI, two very different things well over 1% apart, not even RPI-X alone justifies a cut in rates and is still above their target inflation rate of 2%, that's why we have all this bullsh*t about the CPI 'core rate' of 1.7% excluding oil and erm... almost everything but the fabled Chinese DVD player, which is no longer deflating the numbers.

Edited by BuyingBear

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So inflation has been low... yes it has.. because there hasn't been enough money left for anything else to get more expensive.. infact all other expenditures that go toward measuring inflation are competing toward a smaller pot.

Good point, it's true that so many are spending so much of their take-home pay on their mortgages, fuel, counctil tax, that there's hardly any money left for people to spend and create demand for much.

In addition, turn off MEW and what we've got is a nation that is increasingly a slave to the mortgage lenders.

High house prices and debt is making the economy strangle itself.

I still don't know whether IRs are going to have to go up significantly or not, but I think we're starting to see the US bubble come off the rails now, and I think that this particular snowball has a lot longer to go down the mountain before we see how big it gets....

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The bank reckons incomes will rise to the point where the mountain of debt is supportable. Its a shame the debt mountain has thus been allowed to double again since it said it.

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  • 341 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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