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Dear Gordon

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Guest Time 2 raise Interest Rates

This has to be a classic. Article written in the London Edition of the

Standard and so-so true. Hope I'm not upsetting anyone by posting

it.

Dear Gordon, here's why inflation is blowing up. By Christopher Fildes

I hasten to pass on this letter, which was left (possibly by mistake) on

a number 11 bus from Threadneedle Street to Whitehall:

Dear Chancellor,

You told me to write to you if inflation went over the top. I was to aim

at a target rate of 2% and if it crept above 3%, you would want to know

why. Fortunately, I now have the perfect excuse. All those economists

on the monetary policy committee ganged up with Ed Balls' former editor

and voted me down. Who put them there? You did.

This week saw the inflation rate on its way up again. At 2.5%, it has almost

doubled since you gave us your new Consumer Prices Index, carefully

tailored to leave out the bad news. It looks set to stay well above your

target rate for this year and next. This is not, on the face of it, the obvious

moment to lower interest rates. I thought as much two months ago when

the committee, by a majority, opted to cut them.

My colleagues must speak for themselves- and they certainly do- but they

seemed to me to be responding to cries of pain from the High Street. The

great British consumer was flagging at last, the economy was slowing

down, your own forcasts were looking exposed, so they would come to

the rescue with a shot of cheaper money.

You found it easy to blame the oil producers for slower growth and higher

prices. I think that the customers had more to do with it.

We were helped when China's exporters held down the price of clothes,

but they were kept so busy that they needed to import more oil, and drove

the price up. There are two sides to this coin, and we have now reached

the flip side.

Oil's is not the only price to have gone hurtling upward. Think of gold, or

racehorses, or houses in america, or buy-to-lets in Dubai. People who

promote such assets like to say that walls of money are rolling towards them.

When too much money goes chasing after too few assets, that used to be

known as inflation, and in the end it works its way into the most carefully

constructed index.

I am reluctant, just now, to increase the supply. Goodness knows that we

have tried such tactics before. Thirty years ago, our own economy was a

working, or non-working, model of low growth and high inflation.

It had reached that state after many attempts to use inflation to buy growth

on the principle that another little drink wouldn't do us any harm. In the end,

they nearly killed us, and the cold-turkey cure was no fun either.

I would rather hope that the cycle is turning at last, and that an economy

fuelled by debt and driven by spending may come to be led by investment

and exports.

While we wait, though, I thought that I might just as well draft this letter.

Thank you for sending me another old Treasury hand as my Deputy

Governor. I can take a hint.

Best wishes,

Mervyn

Good old, Christopher Fildes. Really hit the nail on the head with this one.

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This has to be a classic. Article written in the London Edition of the

Standard and so-so true. Hope I'm not upsetting anyone by posting

it.

Dear Gordon, here's why inflation is blowing up. By Christopher Fildes

I hasten to pass on this letter, which was left (possibly by mistake) on

a number 11 bus from Threadneedle Street to Whitehall:

Dear Chancellor,

You told me to write to you if inflation went over the top. I was to aim

at a target rate of 2% and if it crept above 3%, you would want to know

why. Fortunately, I now have the perfect excuse. All those economists

on the monetary policy committee ganged up with Ed Balls' former editor

and voted me down. Who put them there? You did.

This week saw the inflation rate on its way up again. At 2.5%, it has almost

doubled since you gave us your new Consumer Prices Index, carefully

tailored to leave out the bad news. It looks set to stay well above your

target rate for this year and next. This is not, on the face of it, the obvious

moment to lower interest rates. I thought as much two months ago when

the committee, by a majority, opted to cut them.

My colleagues must speak for themselves- and they certainly do- but they

seemed to me to be responding to cries of pain from the High Street. The

great British consumer was flagging at last, the economy was slowing

down, your own forcasts were looking exposed, so they would come to

the rescue with a shot of cheaper money.

You found it easy to blame the oil producers for slower growth and higher

prices. I think that the customers had more to do with it.

We were helped when China's exporters held down the price of clothes,

but they were kept so busy that they needed to import more oil, and drove

the price up. There are two sides to this coin, and we have now reached

the flip side.

Oil's is not the only price to have gone hurtling upward. Think of gold, or

racehorses, or houses in america, or buy-to-lets in Dubai. People who

promote such assets like to say that walls of money are rolling towards them.

When too much money goes chasing after too few assets, that used to be

known as inflation, and in the end it works its way into the most carefully

constructed index.

I am reluctant, just now, to increase the supply. Goodness knows that we

have tried such tactics before. Thirty years ago, our own economy was a

working, or non-working, model of low growth and high inflation.

It had reached that state after many attempts to use inflation to buy growth

on the principle that another little drink wouldn't do us any harm. In the end,

they nearly killed us, and the cold-turkey cure was no fun either.

I would rather hope that the cycle is turning at last, and that an economy

fuelled by debt and driven by spending may come to be led by investment

and exports.

While we wait, though, I thought that I might just as well draft this letter.

Thank you for sending me another old Treasury hand as my Deputy

Governor. I can take a hint.

Best wishes,

Mervyn

Good old, Christopher Fildes. Really hit the nail on the head with this one.

If you had told me that a HPCer had written that, I would have believed you. That's got to be a good sign!

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We haven't given one of these out for a while, but it as to be said..

CHRISTOPHER FILDES, HOUSEPRICECRASH HERO

(...whether he likes it or not)

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Guest Charlie The Tramp

Is this in today`s Evening Standard.

Christopher Fildes is a columnist for The Spectator.

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Guest Time 2 raise Interest Rates

Is this in today`s Evening Standard.

Christopher Fildes is a columnist for The Spectator.

Charlie It's in the business pages of today's London Evening

Standard, page 33.

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Guest struthitsruth

Christopher Fildes OBE is the doyen of London’s financial columnists. As well as the writer of the City and Suburban column in The Spectator, he has for many years served as a financial columnist in The Daily Telegraph. In a journalistic career spanning four decades, he has also written for the City pages of The Times and The Daily Mail, and was the founding editor of Euromoney.

http://www.interculturalpress.com/shop/product49.html

He gets around a bit I guess

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Legend.

Why should people listen? Because he's seen it all before and his job doesn't depend on Gordon's largesse or patronage.

Edited by Tempest

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Guest Charlie The Tramp

Charlie It's in the business pages of today's London Evening

Standard, page 33.

On me way to Teckys to buy it, one for the collection together with Humphrys penalty goal on Brown. :D

In a journalistic career spanning four decades, he has also written for the City pages of The Times and The Daily Mail, and was the founding editor of Euromoney.

They`re the sort of Journalists I like reading, been there before just like us oldies. ;)

Hey Apollo where art thou, Christopher wants a word in your shell like. :P

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Yes, Ask Chris about "core" inflation and what happened in the 1970s when half the index was thrown out as being too volatile. Great article by him the Spectator a few weeks back. Must dig it out.

Edited by Tempest

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Guest Riser

No need for Gordon to worry he still has the BBC behind him.

BBC news at 10 political correspondent said economy was only growing at half Gordons forecast but it was not his fault although it may cause a reduction in tax receipts.

Of course it was his fault why don't people wake up to the fact. A poll on ITV earlier said around 45% would like Cameron as PM while only 33% would like Brown so perhaps the tide is turning, a few more months and it will be a different story. I went to look at a new house to rent today, the agent agreed prices had gone crazy here in the north and without prompting he said he expected 30% falls by next year, adding, a lot can happen in a year. Cheered me up no end after the VI onslaught over the past week.

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No need for Gordon to worry he still has the BBC behind him.

BBC news at 10 political correspondent said economy was only growing at half Gordons forecast but it was not his fault although it may cause a reduction in tax receipts.

Of course it was his fault why don't people wake up to the fact. A poll on ITV earlier said around 45% would like Cameron as PM while only 33% would like Brown so perhaps the tide is turning, a few more months and it will be a different story. I went to look at a new house to rent today, the agent agreed prices had gone crazy here in the north and without prompting he said he expected 30% falls by next year, adding, a lot can happen in a year. Cheered me up no end after the VI onslaught over the past week.

I saw the BBC news last night. It was a pretty weak performance by Evan Davies. I don't think he even mentioned the consequences of GDP growth sagging.

As for the next election, I don't like any of them although I will try to remain open minded about it.

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"I would rather hope that the cycle is turning at last, and that an economy

fuelled by debt and driven by spending may come to be led by investment

and exports."

Go ahead and hope, Merrvyn.

It exists already. Half way around the world in a place called China.

Banks there do not see it as their duty to fuel House price inflation,

and that is a big difference with the UK and the USA

Agree 100%.

Mervyn and the gang have destroyed any chance of manufacturing coming back. They are obvously totally oblivious to the economic realities that industrial and manufacturing output cannot competete with the the plumped up rent/rates/insurance/taxation and a whole host of other costs that have been rocketed, instead all they looked at for years was a basket of goods dominated by cheap chinese tat.

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Guest Time 2 raise Interest Rates

With regards to the opening article by Christopher Fildes, I wondered

if you had the chance to be Mervyn King for the day and write a letter

to the Chancellor, what would you like to say to him?

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It had reached that state after many attempts to use inflation to buy growth

That's what'll happen if the Government doesn't take inflation seriously.

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  • 301 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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