Tuesday, February 16, 2010

Making it up as they go along?

Inflation goals all wrong - IMF call to lift target to 4pc

THE International Monetary Fund has called for the overthrow of inflation targeting as the central goal of economic management, and urged that inflation be allowed to rise to 4 per cent to give governments a better ability to manage downturns.

Posted by novice pete @ 06:28 PM (1846 views)
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20 thoughts on “Making it up as they go along?

  • Wait a sec… is that “end inflation targeting” or “change the target to 4%”?

    How about calling an end to this central banking nonsense all together?

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  • What about 6%?

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  • 4% is ridiculous. My calculations clearly show that the magic number is 4.673%. How long are people going to be strung along by the incessant conclusions that the new magic figure is somehow finely balanced so as to usher in prosperity, save the whales and counter mule sterility? Stabbing in the dark, pretense that they’re managing something. What 6s said.

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  • “I love it when a plan comes together”

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  • mark wadsworth says:

    Mr G sort of tipped this argument into young-versus-baby boomers (which it is, to a large extent).

    But what would be fun is a straight fight between a reckless pensioner who has MEWed to the hilt but ‘doesn’t want to lose the family home’ (and might welcome a bit of inflation) and a cautious pensioner who’s got some money in the bank is earning very little in nominal interest (and doesn’t want inflation to erode it even further).

    Because that’s what Home-Owner-Ism boils down to – politically manipulated random transfers of wealth which are impossible to justify.

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  • ‘The IMF’s recommendations up-end 15 years of economic orthodoxy’. If the last 15 years of central bank policy has been orthodox, then it really does need up-ending.

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  • happy mondays says:

    Wait a minuit ! Young v’s Old, only one thing for it,,, FIGHT !
    As Harry Hill would say,…

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  • [email protected] “But what would be fun is a straight fight between a reckless pensioner who has MEWed to the hilt but ‘doesn’t want to lose the family home’ (and might welcome a bit of inflation) and a cautious pensioner who’s got some money in the bank is earning very little in nominal interest (and doesn’t want inflation to erode it even further).”

    I’ve no sympathy whatsoever for reckless people of any age!

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  • I did warn – the rules they keep a changin’.

    Looks like having some debt may be prudent afterall.

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  • stillthinking says:

    If it were possible for cash holders and also bank savers and also wages to continously stay in trim with losses due to inflation, I doubt anybody would care what the inflation rate was, and they would have no need to care because there would be no point to one anyway.

    Is sterling a reliable store of value, or is it not?

    So far not. I was posting a lot on this site because lengthy unemployed, happily (umm…) back donkey labour now. I don’t want to save in sterling and I won’t be doing so. Fortunately for and due to Gordon, I will only have trivial external savings (I had a thousand pounds in a Japanese yen before the pound devalued, I got ~250 free from that and it made me think). If a lot of people start to think the same then thats the beginning of the end of the currency. Whatever else insane plans come up, the one thing that must remain true is that the interest rates on borrowing are above the depreciation rate of the currency. This line can’t be crossed.
    The only reason why inflation at 4% is suggested is to ease debt repayment. But it doesn’t, maybe it does restore bank profitability, but people will tire of it.
    My point is that inflation rates are arbitary (imagine if every, literally every, price and wage doubled tomorrow, who would care). This is more of a suggestion to tax. Maybe there are some suckers in the UK but they don’t include me and even the rest will wise up fairly rapidly.

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  • mark wadsworth said…
    Mr G sort of tipped this argument into young-versus-baby boomers (which it is, to a large extent).

    Interesting point. What strikes me is that, in the current climate, everyone is taking a tack to the effect that ‘some other B’stard should pay’
    Savers are incessed that there’s no return on their savings….got my sympathy.
    Wannabe FTB’s want everything to be ‘normal’ so they can afford a house…. again ditto
    Pensioners ‘paid in all their lives’ and ‘deserve more’ ditto
    Bloody taxes….I’ve a big mortgage to pay and holidays to have….probably working hard …some sympathy
    So many punters wanting a return on their ‘bet’….for every financial decision we’ve all taken so far has effectively been a bet on the Financiers knowing what they do.
    Autumn 2008 was a time when the notion of money nearly collapsed, truly probably days (hours?) away.
    Well done Broon.
    Not many comment on that apocalyptic scenario…..not many in here have seen truly anarchic societal collapse, up close…think Blade runner on Acid – Rwanda- Pol Pot, then double it.
    London could one day be where the multicultural experiment disintegrates into tribal genocide….a hundred tribes fighting over loaves.
    We’re all going to pay for it .The bubble popped, the party ended and savers, pensioners, taxpayers….all the disparate parties better get used to the fact the party’s over.
    The Anglo Saxon world voted these clowns in for near thirty years……we’re all culpable, and have to pay….and should stop our collective whine.

    Now the bankers…..there’s a special case – anyone know where the scion of old Albert Pierrepoint abide?

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  • mark wadsworth says:

    Braindeed, glossing over my enthusiasm for Land Value Tax, do you have any sympathy for the idea that we liberalise planning laws (for residential and commercial) and/or build more social housing?

    Surely that’s a one-sided bet – some people get a nicer house (or better job) than they otherwise would have done and nobody who already has a house or a job needs to worry about losing it?

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  • Prima facie: Yes good idea,although it would need to be accompanied by a raft of counter-balances.
    But as a stand alone thesis, its thinner than a anorexic maasai.

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  • ……….Homeowners, Goalpost, Election, Laters!!

    @14.
    Agenda 21. Shame that your intelligence and clear thinking will be to no avail.

    We do not live in the rational and fair world that you so wish this to be.

    Fair play is an illusion; a momentary dream. Comfort that warm soft pillow when you awake Mark.

    Humanitarianism is at the bottom of the ‘occult’ list.

    People get what a corrupt democracy has to offer……. The Forbidden Fruits.

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  • brickormortis says:

    I was thinking, in this year’s world cup, when England get to a penalty shoot-out as they inevitably will, can we make the goals bigger for our penalty takers or have a crane lift up the goals as John Terry is about to kick it over the bar and hey presto – he will score instead. Genius!

    What about this one. Change the aim of the game! I remember that board game Going for Broke where one had to lose all their money – if we made losing money and becoming poorer are game then we would turn all this bad news into good news and we would all be winners in our own losing way!!!!!

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  • Fine, let them raise the target inflation level as long as they also offer positive savings rates in return. Otherwise I’ll be dumping all currencies and going long gold, silver and the Matebele Gumbo Bead! (showing my age there!)

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  • Nice to seeMunchy .
    a bit more relaxed

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