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crashmonitor

Bank Finally Losing Credibilty Over Inflation

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The BoE brigade are snake oil salesmen. Everything will be fine they will say. Until it isn't. Then it will be someone else's' fault. - 'Evil speculators', 'It started (again) in America', etc.

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There is much confusion about “credibility”. Many commentators appear to believe that, just because market expectations imply inflation being only moderately above target for a while, the Bank therefore has credibility. But actually that merely means financial markets agree, broadly, with the Bank’s inflation forecast, even if its own forecasting record has been poor since 2006. Agreeing with a forecast isn’t credibility.

There maybe confusion about "credibility" amongst many commentators but the word has a definition so they shouldn't be confused.

credibility

The definition of credibility is the quality of being trustworthy or believable.

Their inflation forecasting has been extremely "poor" since they officially took over the job since 1997 and the number of contradictory statements coming out and sometimes made within days of each other seems too many to number. The "unexpected" collapse of the economy. Then there was the Libor fraud about which apparently "we know nothing".

Although they do know how to keep their own pensions intact by apparently switching their pension fund to inflation protected investments at the right time.

BoE's crediblity on inflation and the economy = zero.

Edited by billybong

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Switching their own pension pots to the very opposite of what they were telling the public - was when they moved from 'useless' to 'corrupt' - in my opinion.

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Amazing that anyone considers the BoE has any left. A 2year fan chart going back to target seems to have mystical powers. It's obvious they were unconcerned with price rises in fuel and food recently, a price worth paying to fight general deleveraging forces.

Food and energy spikes tend to have an immediate disinflationary impact on the broader economy. Every penny spent on essentials is a penny lost from consumption elsewhere. Inflation kicks in when workers demand pay rises to compensate their declining living standards.

Gotta love Brent @ $117, though. 20p on a gallon litre of petrol? :D

.

Edited by zugzwang

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Recent months have seen a distinctly rosier picture for the UK macroeconomy. GDP is estimated to have grown at 0.7pc in the second three months of 2013, and since then most survey data have suggested a further pick-up. Quarterly growth numbers pushing 1pc seem plausible for the second half of 2013 in a way that few commentators would have dreamed only six months ago.

Commentators and their dreams of 1pc quarterly "growth" - achieved by hundreds of billions of QE and the base rate still at the lowest level in more than 300 years.

Effectively growth through inflation so on average the average person will be another 1pc poorer each quarter through "growth".

Do dream on you commentators.

Edited by billybong

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Food and energy spikes tend to have an immediate disinflationary impact on the broader economy. Every penny spent on essentials is a penny lost from consumption elsewhere. Inflation kicks in when workers demand pay rises to compensate their declining living standards.

Gotta love Brent @ $117, though. 20p on a gallon litre of petrol? :D

.

Yes, I ought to have made it clear it was the bank's view not mine about 'a price worth paying'.

Nevermind though, I'm sure people will find a way to stop those disinflationary forces in a manner Osborne approves of...by putting it on the tick:

taee.jpg

http://www.bba.org.uk/statistics/article/july-2013-figures-for-the-high-street-banks/high-street-banking/

Edited by cheeznbreed

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Food and energy spikes tend to have an immediate disinflationary impact on the broader economy. Every penny spent on essentials is a penny lost from consumption elsewhere. Inflation kicks in when workers demand pay rises to compensate their declining living standards.

Gotta love Brent @ $117, though. 20p on a gallon litre of petrol? :D

.

They are going to be hard pressed to say the harvest has failed this year. Maybe a few Wickermen were burnt after last year's failure.

F**k you Tesco with your two quid bags of apples, try selling them at that price this autumn......

http://www.theguardian.com/environment/2013/aug/23/fruit-growers-harvest-food-gathering

Edited by crashmonitor

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Switching their own pension pots to the very opposite of what they were telling the public - was when they moved from 'useless' to 'corrupt' - in my opinion.

Yep. Treacherous in my view.

They talked about low inflation and then their pension committee (including Mervyn King) switched their pensions to index-linked.

Follow the money. The key to understanding organised crime.

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They are going to be hard pressed to say the harvest has failed this year. Maybe a few Wickermen were burnt after last year's failure.

F**k you Tesco with your two quid bags of apples, try selling them at that price this autumn......

http://www.theguardian.com/environment/2013/aug/23/fruit-growers-harvest-food-gathering

Tesco are a rip-off, I hardly buy anything there as they have a 20% paddy tax. The other supermarkets here are better, 3 bags of apples/pineapples/broccoli for €2 at the weekend.

http://supervalu.ie/wp-content/uploads/2013/08/SV-PA312-LR-Final.pdf

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The key problem with losing credibility on inflation is the mass unemployment that will be the consequence, as it was in the 1980s.

Will be the consequence - as if it's some time in the future.

When you add it all up including the official unemployment figures, the economically inactive including the young funding their unemployment through student loans, all the part time and temporary work etc etc then the UK already has mass unemployment.

It could effectively be nearly 50% of the working age group.

The BoE has no credibility even on the official inflation figures.

It lost it's credibility a long time ago (if it ever had any) and housing inflation outside of the official inflation figures has contributed hugely towards the current mass unemployment and moronically continuing those policies on housing along with huge inflation in energy, fuel and food costs etc etc is only going to make the mass unemployment worse.

Edited by billybong

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Switching their own pension pots to the very opposite of what they were telling the public - was when they moved from 'useless' to 'corrupt' - in my opinion.

I actually wrote to the FSA trying to get them to investigate this insider trading. My hope was that some FSA folk might be disgruntled about the FSA being disolved. Nothing doing, sadly.

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I actually wrote to the FSA trying to get them to investigate this insider trading. My hope was that some FSA folk might be disgruntled about the FSA being disolved. Nothing doing, sadly.

Not even a reply ?

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Wed Aug 28, 2013 4:24pm BST

(Reuters) - Bank of England Governor Mark Carney warned financial markets on Wednesday that the bank would pump more money into Britain's economy if they bet against it and choked off recovery.

BoE/Treasury got an expensive lesson when they tried to defend the £ at too high a level in the ERM. They had to back down against the weight of the markets. Would be the same if the markets went for it again but on interest rates, as comes a point money-printing to defend your position makes things worse.

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Not even a reply ?

Oh, they replied in writing but essentially said 'nothing to see here, move along'. I think they said that I had failed to provide specific evidence of a personal negative effect of the bank's actions I was claiming. Inflation and currency devaluation weren't good enough, apparently. I don't think I kept the letter.

Q

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Oh, they replied in writing but essentially said 'nothing to see here, move along'. I think they said that I had failed to provide specific evidence of a personal negative effect of the bank's actions I was claiming. Inflation and currency devaluation weren't good enough, apparently. I don't think I kept the letter.

Q

There is no end to the corruption in this country.

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What is inflation?....having more money in your pocket and spending it......deflation is having less money in your pocket so not spending it.........there is no inflation without having money to spend. ;)

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