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Bank’s Credibility Gap Over ‘true’ Measure Of Inflation - Sunday Times

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'Bank’s credibility gap over ‘true’ measure of inflation' - Sunday Times 3rd September 2006

'Now, however, the Bank faces a problem, arguably its most serious yet. There are doubts, not just about its ability to control inflation in future, but if it is under control now. Those doubts stem from scepticism about whether the consumer prices index (CPI), the Bank’s target inflation measure, accurately reflects people’s genuine experiences.

This is a serious matter, as Bank insiders are aware. If people stop believing the inflation numbers, the credibility of monetary policy suffers. That could begin the slippery slope to economic anarchy.'

http://www.timesonline.co.uk/newspaper/0,,...40136_1,00.html

Edited by CrashDive

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"Before I went on holiday (airport chaos, lost luggage, virulent foreign bug), I suggested scaffolding could be a useful new economic indicator. These days it appears to be popping up everywhere, even for simple household maintenance tasks.

Little did I realise what a Pandora’s box this was. The scaffolding boom, it seems, owes everything to bureaucracy, particularly the Work at Height Regulations 2005, which came into effect in April last year.

These rules, which had their origins in Brussels, define “at height” as any place where a person could be injured falling. In practice, work above two metres appears to require scaffolding. If your window cleaner is hanging precariously from his ladder, he could be breaking the law. "

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No wonder the UK is in such a state the when you look at these bureaucratic rules. You're allowed to work 2 Metres off the ground MAX, after that you need cherry pickers or scaffolding. Looks like every window cleaner in the land is breaking the law now then.

Madness , utter madness

Edited by Johnny

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Guest Alright Jack

This is a serious matter, as Bank insiders are aware. If people stop believing the inflation numbers, the credibility of monetary policy suffers. That could begin the slippery slope to economic anarchy

Once again the press are looking at the empty stables and the door swinging in the wind...

The 'slippery slope' begins when the banking system starts inflating the money supply with credit. The fraudulent so called inflation measures such as the CPI are just a means to try to cover up the arrival of the painful sysmptoms of an inflationary cycle. The painful sysmptoms are when the inflation stops raising asset prices making everyone happy and, instead, begins raising the prices of real things such as petrol and food making everyone mad.

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Contrary to popular myth, consumer-electronic products are not prominent in the CPI, and have a weight of just 27 parts in 1,000. I still have problems with the index but accept that either of the RPI measures gives us something like “true” inflation — in other words between 3% and 3.5%.

If the MPC had continued to target RPI or RPI-X, with a correspondingly higher target, I don't think interst rate decisions would have been any different over the last 10 years.

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'Bank’s credibility gap over ‘true’ measure of inflation' - Sunday Times 3rd September 2006

'Now, however, the Bank faces a problem, arguably its most serious yet. There are doubts, not just about its ability to control inflation in future, but if it is under control now. Those doubts stem from scepticism about whether the consumer prices index (CPI), the Bank’s target inflation measure, accurately reflects people’s genuine experiences.

This is a serious matter, as Bank insiders are aware. If people stop believing the inflation numbers, the credibility of monetary policy suffers. That could begin the slippery slope to economic anarchy.'

http://www.timesonline.co.uk/newspaper/0,,...40136_1,00.html

Guess what the answer is!!!!!

MUCH higher IR's and a subtle readjustment of the CPI basket to slowly include inflationary items.........giving the MPC excuse to rise further,while jobs are being shedded 10 to the dozen.

Nu lab are trying to immigrate the problem away,but we already know from the china experience that it's only a short term measure....wage inflation in some industries there is running at 17%.

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The inflation that has happened in the previous years has mostly not been in the CPI e.g. house prices.

If the MPC was to put things that had undergone bubble inflation into the CPI basket now, like housing and housebuilding equipment then when the bubbles pop (house price crash) then inflation would go strongly negative. The MPC would then have to take action to inflate the economy which would inflate all sectors that had not been hit by bubble inflation such as food.

Edited by Della

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The inflation that has happened in the previous years has mostly not been in the CPI e.g. house prices.

If the MPC was to put things that had undergone bubble inflation into the CPI basket now, like houseing and housebuilding equipment then when the bubbles pop (house price crash) then inflation would go strongly negative. The MPC would then have to take action to inflate the economy which would inflate all sectors that had not been hit by bubble inflation such as food.

RPI includes mortgage costs (RPI-X specifically excludes mortgage costs), and this was the mesure that was used pre-1997.

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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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