Monday, February 20, 2012

Inflation control?

We can't survive on our pension thanks to QE and a change in the law

Pension payments have been hit hard. This directly takes demand out of the economy, which is supposedly demand deficit. The restrictions are deliberate, as this fairly clued up pensioner points out, there are double the returns out there. So I wonder if as a policy tool pensions are now explicitly considered an inflation control, and are used as a demand control similar to interest rates i.e. lower pensions==higher interest rates. In which case government announcements of demand deficiency are purely propaganda, and we currently have no output gap possibly due to lack of investment in the means of production. Also by implication, there can be no stimulus now which is not ineffective and inflationary, so any stimulus argument is moot. So the only path out is tight belts and investment.

Posted by stillthinking @ 03:32 AM (2476 views)
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5 thoughts on “Inflation control?

  • I suspect it’s little consolation to the young that there are some boomers also being shafted by sleight of policy and money printing.

    I do also suspect that the concentration on improving the spending power of the indebted over the spending power of savers is simply a matter of numbers. I also suspect that there is an unofficial policy move to try to solve both problems by disincentivising saving to the degree that prudence is actually reckless.

    The most galling aspect is the crocodile tears and endless encouragement in the media to save for a pension or to save for anything – including a house.

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  • Hi Paul,

    Europe, The UK and the US are in a difficult position, right now. Whether its the fault of the bankers, politicians or anyone else doesn’t help young people buying an overpriced house in the UK.

    The ways of working and living are changing; there are accidental winners and losers. I’ve seen suffering in many parts of the world and don’t derive any satisfaction (or consolation) from what I’ve seen.

    Expect to see more impoverishment however the economic agenda plays out over the next 2 or 3 years. I hope that you escape most of these adverse impacts.

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  • our atitude to currency needs to change. Fiat money is viewed as both a means of trade and a store of wealth, however it’s not a store of wealth anymore with financial repression and negitive real interest rates. When you know this you can change your behaviour and save through other means. This obviously means that you need to invest and assume some risk, not ideal for most savers who are generally risk adverse, but holding your wealth in a single currency or economy is a risk in itself.

    there should be more education on finance and awareness in the MSM.

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  • Hardly anyone who reads the Independent is going to know what income draw down is .

    They’ve all got defined benefits pensions courtesy of everyone else .

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  • Income drawdown is just another example of the sh*t produced by the financial spivs and conmen.

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