ronnie Posted June 6, 2006 Share Posted June 6, 2006 why doesnt pound drop like a stone if inflation is as rampant as many on here suggest?? Quote Link to comment Share on other sites More sharing options...
Jason Posted June 7, 2006 Share Posted June 7, 2006 Because it's not just the UK. It's in virtually all fiat currencies. Compare it against something constant, there will be your answer. Quote Link to comment Share on other sites More sharing options...
dnd Posted June 7, 2006 Share Posted June 7, 2006 (edited) I thought only interest rate adjustments impacted currency value? If it's based on current 'official' inflation rate figures it's not going anywhere Edited June 7, 2006 by dnd Quote Link to comment Share on other sites More sharing options...
theChuz Posted June 7, 2006 Share Posted June 7, 2006 why doesnt pound drop like a stone if inflation is as rampant as many on here suggest?? rampant inflation everywhere and gold falls oh well Quote Link to comment Share on other sites More sharing options...
Magpie Posted June 7, 2006 Share Posted June 7, 2006 (edited) Because it's not just the UK. It's in virtually all fiat currencies. Compare it against something constant, there will be your answer. Except there isn't anything constant to compare it to. The value of everything is measured by what you can exchange it for, so all values fluctuate. There is no such thing as absolute value. If you're talking about gold, then it makes for a scary looking picture of the last year or so. However for two decades before that it would have given a completely different picture, one of close to zero inflation, or even falling prices. That wasn't true, so nor is it true that gold's recent rises prove there is massive inflation. Or is there some other "constant" value held in a darkened basement somewhere which I don't know about? Edited June 7, 2006 by Magpie Quote Link to comment Share on other sites More sharing options...
Charles_Darke Posted June 7, 2006 Share Posted June 7, 2006 Except there isn't anything constant to compare it to. The value of everything is measured by what you can exchange it for, so all values fluctuate. There is no such thing as absolute value. If you're talking about gold, then it makes for a scary looking picture of the last year or so. However for two decades before that it would have given a completely different picture, one of close to zero inflation, or even falling prices. That wasn't true, so nor is it true that gold's recent rises prove there is massive inflation. Or is there some other "constant" value held in a darkened basement somewhere which I don't know about? House prices? Quote Link to comment Share on other sites More sharing options...
theChuz Posted June 7, 2006 Share Posted June 7, 2006 Unleash THE CONSTANT! Quote Link to comment Share on other sites More sharing options...
Magpie Posted June 7, 2006 Share Posted June 7, 2006 (edited) House prices? Yes I thought of dragging that in, but thought better of it. But I do find it odd when people argue that (for instance) the rising price of gold indicates that fiat money is subject to massive inflation, but refuse to apply the same argument to house prices. Personally I don't think it's true of either, but if you think it's true of gold, why not houses? Unleash THE CONSTANT! I'm picturing a superhero, kept dormant far below the deepest vaults of Fort Knox... Edited June 7, 2006 by Magpie Quote Link to comment Share on other sites More sharing options...
Jason Posted June 7, 2006 Share Posted June 7, 2006 Well I was going to say Gold and House prices! But I agree, it's not perfect! Quote Link to comment Share on other sites More sharing options...
Magpie Posted June 7, 2006 Share Posted June 7, 2006 Well I was going to say Gold and House prices! But I agree, it's not perfect! To be fair, the overall rise in all commodity prices, including gold and house prices, does seem to indicate some inflationary pressure and/or hidden price inflation. So I'm not completely dismissing your basic point, just questioning whether there is any single measure that can be used... Quote Link to comment Share on other sites More sharing options...
Charles_Darke Posted June 7, 2006 Share Posted June 7, 2006 Hasn't property always been used as a long-term hedge against inflation? Quote Link to comment Share on other sites More sharing options...
Magpie Posted June 7, 2006 Share Posted June 7, 2006 Hasn't property always been used as a long-term hedge against inflation? Er... yes. But there's a few here who'll tell you that in ten years' time you won't be able to swap a typical house for a packet of cornflakes. Having said that, the scenario in which it might not be a long-term hedge is one like the Japanese economy where you get decades of deflation. Could happen, probably not, but worth bearing in mind. Quote Link to comment Share on other sites More sharing options...
non-FTBer Posted June 7, 2006 Share Posted June 7, 2006 rampant inflation everywhere and gold falls oh well Have you been buying gold again? Quote Link to comment Share on other sites More sharing options...
okonu Posted June 7, 2006 Share Posted June 7, 2006 Hasn't property always been used as a long-term hedge against inflation? Commercial property - yes, which is why most office & retail buildings are owned by pension funds. Domestic - no. Only in the last 10-15 years have tenancy laws been landlord friendly enough. Quote Link to comment Share on other sites More sharing options...
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