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David Blanchflower: Woof! The Deflation Dog Is Barking Loudly – But The Bank Of England Won’T Do Anything


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HOLA441

http://www.independent.co.uk/news/business/analysis-and-features/david-blanchflower-woof-the-deflation-dog-is-barking-loudly--but-the-bank-of-england-wont-do-anything-9834532.html

This Thursday the Bank of England will stand pat: its rate-setting Monetary Policy Committee will keep its asset purchase programme unchanged at £375bn and its rates on hold at 0.5 per cent, where they’ve been since March 2009. In contrast, other central banks have been doing something.

The Bank of England is the only major central bank in the world that has any of its members voting for rate rises. But the Japanese central bank, in a surprise move to avoid deflation, expanded its quantitative easing programme: Japan wants to weaken the yen to get inflation – currently at 1 per cent – back to the 2 per cent target. The oldest central bank in the world, the Swedish Riksbank, cut rates to zero in response to deflation. Its deposit rates for banks is in negative territory. That move vindicates their ex-deputy governor Lars Svensson, who had resigned when rates were raised to “lean against the wind” of an asset price bubble. He warned this was exactly the wrong thing to do and would cause price falls – and it has.

My old friend Sir Jon Cunliffe – now an MPC member at Threadneedle Street – made clear he is in the doves’ camp in a speech last week. “The softening in the pay and inflation data, together with the weaker external environment, for me implies that we can afford to maintain the current degree of monetary stimulus for a longer period than previously thought.” But the former external MPC member Andrew Sentance recently argued in a Bloomberg interview that deflation is “the dog that hasn’t barked”.

I disagree. That dog is howling loudly now as the deflation pandemic spreads. Oil prices continue to plummet, with Brent crude down to $85 from $115 earlier in the year. The price of a gallon of gas where I live has now dropped below $3 a gallon. Commodity prices across the board are also falling sharply. The Bloomberg Commodity Price Index is down around 16 per cent since May of this year.

Got to keep those asset prices up, if they don't the banks will be in trouble. When this growth feedback loop turns negative christ knows what will happen. Even with all the printing and ZIRP they still haven't managed to avoid the deflation blackhole. The worlds central banks are falling to beat the invisible hand.

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HOLA444

That move vindicates their ex-deputy governor Lars Svensson, who had resigned when rates were raised to “lean against the wind” of an asset price bubble. He warned this was exactly the wrong thing to do and would cause price falls – and it has.

FU Blanchflower and all your VI complacent types who need to be broken by the hardest HPC of all time, on their hyperinflated house prices.

Get fresh debt on their outright owned/equity rich houses, at much lower transaction prices, for the good of the banks, shareholders, government revenues, and the economy.

The population of potential Buyers has DECREASED

…. due to LACK OF SUFFICIENT INCOME to pay such HIGH PRICES.

Many Buyers either CAN'T QUALIFY and therefore can’t BUY

.. OR WILL JUST NOT BUY ANYTHING OUT OF “FEAR” when extreme

asking prices are so SCARY ALREADY.

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So....we can twiiter him can we?

Has someone invited him on to this site so that he can explain himself?

(currently hiding behind sofa....not that I`m scarred or nuffin......)

Had a mild ruckus with him on Twitter about a year back.

He didn't take kindly to me blaming him for UK HPI.

Esp the bit about the 2005 rate cut.

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Had a mild ruckus with him on Twitter about a year back.

He didn't take kindly to me blaming him for UK HPI.

Esp the bit about the 2005 rate cut.

Me too - he blocked me fairly quickly.

L'il Danny has a bit of a sensitive ego, and doesn't react well to people questioning his unbridled brilliance. It's quite clear in that article that he sees everyone who agrees with him as a great friend, and everyone who disagrees as a personal enemy.

The bloke has serious mental and emotional issues if you ask me (I wonder what might have provoked that?), and his opinion should be totally ignored until he learns that other people's opinions can have value even if they don't tally with his own.

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Me too - he blocked me fairly quickly.

L'il Danny has a bit of a sensitive ego, and doesn't react well to people questioning his unbridled brilliance. It's quite clear in that article that he sees everyone who agrees with him as a great friend, and everyone who disagrees as a personal enemy.

The bloke has serious mental and emotional issues if you ask me (I wonder what might have provoked that?), and his opinion should be totally ignored until he learns that other people's opinions can have value even if they don't tally with his own.

Haha, sounds familiar.

Evangelist nutjob.

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Does he claim to have the solution to the 'problem' of deflation being likely in the UK / US?

I can't see that in the article. Sure, he advocates more stimulus, but I don't see any tangible evidence that is successful in economies that are in the state that the UK / US is in.

And, even if it avoids a bit of deflation, is that better than whatever tempest might be unleashed when the stimulus is unwound...?

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That dog is howling loudly now as the deflation pandemic spreads. Oil prices continue to plummet, with Brent crude down to $85 from $115 earlier in the year. The price of a gallon of gas where I live has now dropped below $3 a gallon.

(1988)

Kids take a trip back to the 80s when hand guns were allowed on planes, smoking was allowed in airports, pregnant women were advised

to drink by their female bosses, 14-year-old teenagers were allowed to work as limo drivers....

24fivt4.jpg

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Why don't these guys like cheaper prices? Isn't that the whole point of progress and modern advances, that things would reduce in price?

Indeed, they have spouted off for many years that deregulating and privatising the utilities would help us all to get a better deal.

They modeled it on the free market, when the free market starts to deflate they are shown up for the charlatans they are.

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Does he claim to have the solution to the 'problem' of deflation being likely in the UK / US?

I can't see that in the article. Sure, he advocates more stimulus, but I don't see any tangible evidence that is successful in economies that are in the state that the UK / US is in.

And, even if it avoids a bit of deflation, is that better than whatever tempest might be unleashed when the stimulus is unwound...?

The solution is not to let asset prices hyperinflate in the first place.

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Why don't these guys like cheaper prices?

Falling prices are bad for people with lots of debt and their creditors because it makes those debts unpayable. Significant long term deflation implies large scale definancialisation of the economy.

People like Blanchflower love having an economy as financialised as possible because it maximises the ability of the people who control the money supply to play around with other people's life chances. When the price level rises incessantly everybody is forced to cluster around the source of new money entering the economy like starving villagers clustering around the back of an aid truck.

It's all about power.

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Falling prices are bad for people with lots of debt and their creditors because it makes those debts unpayable. Significant long term deflation implies large scale definancialisation of the economy.

People like Blanchflower love having an economy as financialised as possible because it maximises the ability of the people who control the money supply to play around with other people's life chances. When the price level rises incessantly everybody is forced to cluster around the source of new money entering the economy like starving villagers clustering around the back of an aid truck.

It's all about power.

+1

And money. By way of the frictional arrangements in conjouring up the debt in the first place.

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