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Its All Happening; Ft Tells Woes Of Eurozone Inflation

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Hike you B*ggers Hike!!!!

http://www.ft.com/cms/s/fd550832-11f1-11dc...0b5df10621.html

Jean-Claude Trichet, ECB president, signalled last month that a rise was all but certain by pledging “strong vigilance” against inflation – code words used to indicate an increase is likely.

Concerns expressed by the ECB about the inflationary risks created by increasingly high capacity utilisation rates and fast growth in money supply and credit data,

have fuelled expectations that further rises in borrowing costs will follow. The ECB also fears strong economic growth will encourage inflationary wage deals. The March forecasts showed inflation in 2008 in a range with a mid-point of 2.0 per cent – above the ECB’s target.

Looks as if the ECB consider money supply is a big issue. So, the ECB thinks its an issue, so did Milton Freidman, the only others with similar monetary policy are the chimps ruled byu a monster chimp across the atlantic. We are truly F00ked, and my money will do very well with the extra interest as a result of rate-rises!!! :lol:

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Hike you B*ggers Hike!!!!

http://www.ft.com/cms/s/fd550832-11f1-11dc...0b5df10621.html

Looks as if the ECB consider money supply is a big issue. So, the ECB thinks its an issue, so did Milton Freidman, the only others with similar monetary policy are the chimps ruled byu a monster chimp across the atlantic. We are truly F00ked, and my money will do very well with the extra interest as a result of rate-rises!!! :lol:

Actually, as the banks drag their feet your money is being slowly eroded by inflation.

Strip out the tax you pay on savings interest and your money isn't even keeping up with inflation (RPI)

Like me, you should be pretty pissed off by this fact. Real interest rates have never been so low.

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Going by the Betfair odds, ECB look certain to raise rates. In fact, if you put a fiver on them staying the same right now, you'd win £225 if it happened, compared with 10p on a fiver to raise them .25% :lol:

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Actually, as the banks drag their feet your money is being slowly eroded by inflation.

Strip out the tax you pay on savings interest and your money isn't even keeping up with inflation (RPI)

Like me, you should be pretty pissed off by this fact. Real interest rates have never been so low.

If you get a 3% return on a property rental, this is actually better than a 6% savings rate because savings are eroded by inflation, where as property will rise in line with earnings (if we ignore the boom and busts)

Are stocks and shares pretty much unaffected by inflation like property is?

My savings ISA is 5.5%, so in reality it is 0.7% (5.5% - RPI) which is total pants.

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If you get a 3% return on a property rental, this is actually better than a 6% savings rate because savings are eroded by inflation, where as property will rise in line with earnings (if we ignore the boom and busts)

Are stocks and shares pretty much unaffected by inflation like property is?

My savings ISA is 5.5%, so in reality it is 0.7% (5.5% - RPI) which is total pants.

Slight problem - 10-20 years of wage inflation may already be factored in to house prices! Also assumes we get nice inflation where wages rise more than costs allowing people to dedicate further sums to push up prices.

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If you get a 3% return on a property rental, this is actually better than a 6% savings rate because savings are eroded by inflation, where as property will rise in line with earnings (if we ignore the boom and busts)

Are stocks and shares pretty much unaffected by inflation like property is?

My savings ISA is 5.5%, so in reality it is 0.7% (5.5% - RPI) which is total pants.

Try National Savings 3 year certificate. You can invest up to 15K and get RPI + 1.35% (tax free). Quite a nice way of inflation-proofing part of your portfolio of savings. Need to lock it down for 3 years tho'.

Edited by redwing

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Try National Savings 3 year certificate. You can invest up to 15K and get RPI + 1.35% (tax free). Quite a nice way of inflation-proofing part of your portfolio of savings. Need to lock it down for 3 years tho'.

What if i buy stocks and shares for a longer term investment. ( I wont just now because i am predicting a SM crash).

If I buy shares in large companies, i could expect a 5% dividend, but the share price will also rise in value. This rise in value could stop the inflation erosion.

Does this sound about right?

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What if i buy stocks and shares for a longer term investment. ( I wont just now because i am predicting a SM crash).

If I buy shares in large companies, i could expect a 5% dividend, but the share price will also rise in value. This rise in value could stop the inflation erosion.

Does this sound about right?

Yes and in fact this inflation protection is the Major Reason why Equities are a good long term bet. My pension is ceratianly invested fully into equities.

If you read Warren Buffets rational for investment in equities you can see he has examined all the options and found equities to be best long term. the fact is equities are just more interesting long term investment than Land/property/gold/bonds/commodities they represent the productive capital of an economy.

not that they dont have risks associated with them of course.

Edited by jonpo

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maybe we had better all get into equities then they do keep pace with inflation

This has been my current feeling with the bull run on the stock markets.....

... sod the bubble, give me anything but fiat.

btp

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Try National Savings 3 year certificate. You can invest up to 15K and get RPI + 1.35% (tax free). Quite a nice way of inflation-proofing part of your portfolio of savings. Need to lock it down for 3 years tho'.

Read the small print , although they do 3 and 5 year issues , you can cash all or part in without penalty after 12 COMPLETE MONTHS with all the RPI and interest earnend , copied from NSI site .....................

Year by year rates

3-year 15th Issue

purchase price + Index-linking for year 1 + 1.1% of purchase price = 1st anniversary value

1st anniversary value + Index-linking for year 2 + 1.3% of 1st anniversary value = 2nd anniversary value

2nd anniversary value + Index-linking for year 3 + 1.66% of 2nd anniversary value = maturity value

5-year 42nd Issue

purchase price + Index-linking for year 1 + 0.95% of purchase price = 1st anniversary value

1st anniversary value + Index-linking for year 2 + 1.15% of 1st anniversary value = 2nd anniversary value

2nd anniversary value + Index-linking for year 3 + 1.35% of 2nd anniversary value = 3rd anniversary value

3rd anniversary value + Index-linking for year 4 + 1.55% of 3rd anniversary value = 4th anniversary value

4th anniversary value + Index-linking for year 5 + 1.76% of 4th anniversary value = maturity value

No interest is earned on Certificates (except Reinvestments) repaid in the first year, see terms and conditions.

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