Friday, August 21, 2009

The first pieces of the inflation puzzle are exposed

UK forced to borrow in July first time since 1996

"The recession and rising unemployment cut the corporate tax take by 38 per cent and income from income tax and capital gains tax dropped by 14 per cent. Public spending on benefits rose 10 per cent in July compared with July last year." ... => Therefore companies have cut their profit margins, and at the first sign of any recovery, they need to be reinstated, this will also increase tax revenue, so don't expect any help from Government. Plus of course the minimum 2.5% raise in VAT. (Any bets about a further temporary 2.5% raise in March 2010 ... always a possibility).

Posted by fahrenheit451 @ 10:40 AM (699 views)
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2 thoughts on “The first pieces of the inflation puzzle are exposed

  • I keep saying this and like Cassandra, no-one listens.

    This is the recovery. This is it. Britain’s economic future isn’t like a maze we wind through and find some miraculous solution round the corner to our problems.

    People have confused economists’ lack of ability to predict reliably with a lack of ability to foresee miracles. But miracles don’t happen in the real world.

    If people aren’t sure where the recovery is going to come from, THAT’S BECAUSE IT’S NOT GOING TO HAPPEN.

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  • Inflation. That’s what we have to look forward to. Without inflation, the sins of the past (mewing, negative equity) etc, won’t be erased, and those that struggle in that situation will be non-participants in the free-for-all that makes a modern economy. We will be headed for stagnation.

    Unfortunately inflation will rob the savers and lenders of their assets. Its a war between the Nominal and the Real if you will. Inflation is the great leveller that will reduce us all to an equality of poverty, but at least the economy will get moving again.

    Its a crime. And the reason we are here has less to do with the actions or our particular leaders than it has to do with the very nature of a politician. Can you really expect a politician to burst asset bubbles, and then lecture to all of us that it is really for the best. Would we believe them, or curse them for inducing a minor slump rather than let a great one develop?

    Criticising politicians is therefore a waste of time. As is our political system and therefore voting. All pointless. Why vote when all your choices are equally bad?

    Although most of my equity is actually sitting in bank accounts in the form of cash; I would like to point out that a real economy is based on producers exchanged goods and services to the profit of us all, via the motivation of individual profit. Trying to preserve nominal stockpiles of value stored up by the wealthy or preserving unemployment figures by keeping a vast public sector employed in ‘non jobs’ will not get us out of this.

    We need people to get to work. How hard is it really, to build a house? As I understand it, it costs about 40k in materials and labour to build a house. If the land were free, we would all live in houses. National home ownership would skyrocket. We would all be considerably happier. Instead, vested interests wish to preserve their housing assets at unnaturally high levels, which means many people are forced to live in house shares. Since we don’t want new houses built, that will depress house prices, we give people non jobs in the public sector.

    Ever noticed that the degree to which we consider ourselves to live in the first world, or the degree to which we consider ourselves as happy has a lot to do with the capitalization existing within the economy we live in? The size of our house, or the quality of roads or public transportation. The availability of doctors.

    We need to encourage real jobs. Tradesmen, builders, engineers, scientists, artists etc. Rather than administrators, advertisers, stock brokers, estate agents, politicians or lawyers. We have a certain level of need for these professions, most of these professions encourage an arms race of sorts. The more lawyers company A makes, the more money it makes over company B, so B increases the level of lawyers it has until everything is copywrited, and small time entrepeneurs cannot entire the market becaue they don’t have the lawyer clout to participate. Same thing with advertisers. The more advertisers I have, the more I gain in market share, so advertising departments are getitng larger and larger.

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