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TheCountOfNowhere

Inflation up to 1.8%

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Just now, Conquistador said:

HPI 7.2% yr/yr. But volumes down 35% on autumn 2015. In my neck of the woods, volumes-wise we are back to the pre-HTB period 2010-2012. Stagnation likely.

Stagnation at insane prices ?  Nice.

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Gordon Brow was actually right.   All this micro management gives people little goosebumps, but he did state we were merely a reactionary department of R.O.W. economic gameplay.  However, it is very interesting to look at the current situation in China, with up to 35% y.o.y. HPI in certain demographics.  If anybody is heading for a crash it is them.

With Central London negative hpi teetering on the edge of armageddon, house prices in outlying S.E. areas heading upwards at 8% y.o.y, due to home counties/London exodus, this is EXACTLY the scene as per 1988.    The time is now.

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Apparently the MPC are prepared to overlook short term higher inflation whilst we exit the EU. Very handy! But added that "some members" of the MPC are reaching the limits of their tolerance for inflation, so much so that they could soon start voting for rate rises if inflation really jacks up. "Some members" clearly means not enough to change policy!

There's also no mention of where that limit on inflation is though, 3%? I very much doubt it. 5%? In my mind they'll overlook that too just as they did in 2011.

http://www.independent.co.uk/news/business/news/inflation-latest-18-per-cent-post-brexit-pound-sterling-weakness-high-street-uk-economy-a7578956.html

We are in the monetary roach hotel. We've checked in, we just can't leave. More printy an NIRP will be required to keep this bubble inflated.:(

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5 minutes ago, Noginthenog said:

 

We are in the monetary roach hotel. We've checked in, we just can't leave. More printy an NIRP will be required to keep this bubble inflated.:(

You are Peter Schiff and I claim my free ounce of gold.

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1 minute ago, Noallegiance said:

You are Peter Schiff and I claim my free ounce of gold.

Ha ha!:lol: I wish I was! But you are spot on as I have quoted one of his favourite terms! But I think he is absolutely right, there is no way out of this financial garden maze that these central bankers have created????

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The poor will spoil it for the rich.....Unable to pay the asking price, no business when no customer.

The rich can only spend so much and that will only be in certain places.....they live in a completely different world, away from the rest so no competition, they weasel and hoard much of it anyway so nobody sees it or will ever gain from it.;)

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Im thinking we will get a burst of inflation,then a massive deflation correction everywhere.Central banks will then panic and go QE crazy to fund direct government fiscal spending.Thats when we will see a long term reflation kick in,after the boomers etc have seen their wealth (houses) smoked.It wont be interest rates that kill house prices,but banks refusing to lend.The interest rates will start going up hard in 2019/20 im expecting.Tricky times.Governments need inflation at 4%+ and public sector wages and benefits frozen or running up far behind RPI.

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33 minutes ago, Assume The Opposite said:

Peter Schiff's predictions are notoriously inaccurate. 

From what I've seen I think he does OK. Like the rest of us I just think he underestimates how long the plates can be kept spinning with a seemingly bottomless bag of tricks (which now appear to be running on the last and oldest trick; namely disguise).

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Banks will refuse to lend low interest, high risk no guarantees......How long can real estate remain a good guarantee?.... they will lend to those who can provide a guarantee, like those who would prefer not to use their own money, but happy to borrow the money into the economy......What will they invest in? where will the growth come from if not from a growing population with confidence and growing disposal incomes?;)

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1 hour ago, Noginthenog said:

Apparently the MPC are prepared to overlook short term higher inflation whilst we exit the EU. Very handy! But added that "some members" of the MPC are reaching the limits of their tolerance for inflation, so much so that they could soon start voting for rate rises if inflation really jacks up. "Some members" clearly means not enough to change policy!

There's also no mention of where that limit on inflation is though, 3%? I very much doubt it. 5%? In my mind they'll overlook that too just as they did in 2011.

http://www.independent.co.uk/news/business/news/inflation-latest-18-per-cent-post-brexit-pound-sterling-weakness-high-street-uk-economy-a7578956.html

We are in the monetary roach hotel. We've checked in, we just can't leave. More printy an NIRP will be required to keep this bubble inflated.:(

Their target is 2%...  We're not even there yet!  

3% would be as tolerable (for them) as 1% -- perhaps more so, as 1% is halfway to problem (0%) from 2%, whereas 3% isn't anywhere near problem (7%, say).

At the moment the central bankers are terrified of zero (and deflation).  They're not at all worried about inflation.  They'll start worrying about inflation just a little after it is too late to do anything about it.

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Yes, inflation is a very good way of killing yesterday's debt to enable borrowing tomorrows debt......just because it worked before does not mean it will always work like that.;)

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15 minutes ago, dgul said:

Their target is 2%...  We're not even there yet!  

3% would be as tolerable (for them) as 1% -- perhaps more so, as 1% is halfway to problem (0%) from 2%, whereas 3% isn't anywhere near problem (7%, say).

At the moment the central bankers are terrified of zero (and deflation).  They're not at all worried about inflation.  They'll start worrying about inflation just a little after it is too late to do anything about it.

Under the circumstances, the BoE feels it has latitude to place a higher value on economic stability, and justify the pain caused by inflation by pointing to the quarter million job losses he predicts otherwise. It does have a statutory obligation to target 2% though, so that window for Carney to ignore inflation is restricted.

When consumers and business are so concerned about inflation they'd accept the unemployment to relieve it, there'll be pressure on Carney and Hammond. But both know the government can't afford too much interest on its debts any more than the general public.

The other group who could affect decisions is people with dangerous levels of domestic credit. If they start defaulting in large numbers (they have) but the UK continues to import inflation from the US and even the EU, there's an irreconcilable issue.

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Whatever the BoE/MPC might say about inflation, interest rates and their individual votes etc etc they're just leading people up the garden path as usual.

They lost all credibility long ago.

Edited by billybong

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10 hours ago, darkmarket said:

Under the circumstances, the BoE feels it has latitude to place a higher value on economic stability

"BoE feels it has latitude to place a higher value on economic stability"

BoE does not care about economic stability, the role of central banks is to provide stability only to the financial world regardless of what happens with people and real economy.

Their purpose is to turn off free market mechanisms and make sure no banks can go bust, regardless of how greedy they are, so people do not lose their deposit and does not burn down all banks. So they can just milk us for more and more money forever.

That's the big idea, that's exactly the reason central banks have been originally created for, its there in all economic history books.

If BoE would care about economic stability, people or any meaningful purpose it would print money for REAL businesses, to fight diseases or to build houses for people etc.

Just calculate how much cheap houses US could've built from the 16 trillion dollar spent on bank bailouts up until now. You get a shockingly high number that would've solved ALL housing problem in the US for the foreseeable future. Instead of doing this they just gave it away to banks to maintain the financial sectors privileged status.

Governments assist central banks in these things so they get their inflation values, which makes it possible for the government to get into more and more debt and buy the cheap votes of people who are addicted to free unearned money.

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41 minutes ago, jo_gian said:

"BoE feels it has latitude to place a higher value on economic stability"

BoE does not care about economic stability, the role of central banks is to provide stability only to the financial world regardless of what happens with people and real economy.

Their purpose is to turn off free market mechanisms and make sure no banks can go bust, regardless of how greedy they are, so people do not lose their deposit and does not burn down all banks. So they can just milk us for more and more money forever.

That's the big idea, that's exactly the reason central banks have been originally created for, its there in all economic history books.

If BoE would care about economic stability, people or any meaningful purpose it would print money for REAL businesses, to fight diseases or to build houses for people etc.

Just calculate how much cheap houses US could've built from the 16 trillion dollar spent on bank bailouts up until now. You get a shockingly high number that would've solved ALL housing problem in the US for the foreseeable future. Instead of doing this they just gave it away to banks to maintain the financial sectors privileged status.

Governments assist central banks in these things so they get their inflation values, which makes it possible for the government to get into more and more debt and buy the cheap votes of people who are addicted to free unearned money.

Thats the bankster scum for ya....

Seeing some weakness locally. Stuff sticking being reduced, agents cold phoning me this week as i am chain free buyer, one viewing of a reduced property, chain broke, lots of new instructions at fantasy high prices,  the crash must surely be imminent to those really do want to sell, there are no buyers now.

Edited by GreenDevil

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1 hour ago, jo_gian said:

BoE does not care about economic stability, the role of central banks is to provide stability only to the financial world regardless of what happens with people and real economy.

True, there's nothing to do but watch nature takes its course. What happens between domestic credit and this inflation could be interesting. There's a good breakdown on Bloomberg of different types of credit in the US that pose systemic risks, notably student loans and sub-prime auto:

"Consumers Are Too Giddy When It Comes to Borrowing

...The data reveal that some of these borrowers have already begun to default. As of October, more than 4 percent of the $1 trillion in FHA loans were 90 days or more in arrears.

Distress is markedly higher among FHA loans for obvious reasons. The government-backed debt is the only source of mortgage availability for low-down-payment, subprime borrowers at a time when prices are rising relentlessly.

...Add it up and consumer credit excluding mortgage debt is fast approaching 20 percent of gross domestic product, a record high and a full two percentage points above where it peaked prior to the onset of the last recession.

Lenders are getting nervous. According to the Fed’s latest senior loan officer survey, banks tightened lending standards for credit cards for the first time since 2010."

https://www.bloomberg.com/view/articles/2017-02-14/consumers-are-too-giddy-when-it-comes-to-borrowing

This just after Carney renewed his vigilance warning over the systemic risk domestic credit has become in the UK (too modest to mention he made it himself).

As prices start to rise and weak pound meets strong dollar, the obvious answer is to use a credit card while rates are so low to avoid missing out on things you're used to. Keeping people quiet while inflation bites will keep the BoE and the Treasury happy, so there's an incentive for them to let it go unchecked, just like they've used it to distort GDP. Talk of how "lenders are getting nervous" over default risks is interesting. It's like watching a fat kid approach a cake.

 

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