Inflation, is it the elephant in the room?

ONS released data this morning, inflation at 1.9%..how long can the lid be kept on and interest rates be kept at 0.5%? Have the BoE/Govt/MPC painted themselves into the corner of the very same room? If base rates rise to even a v. low 2% that extra 1.5 ticks on, for example, the average mortgage and O/D (and surely the banks couldn't swallow it) will kill any recovery surely? Or is the 'master plan' an attempt to inflate away debt similar to the 70's...? Dunno...

Pasted another link to an Edmund Conway article in which he discusses the expansion of the BoE balance sheet. Last time we had such a spike was after WW2, but the recovery then and the reasons for it can hardly be held up to fair comparsion, starting from day zero was arguably a lot less complicated an affair...Has it been that bad, we've experienced a once in a lifetime economic shock that the majority have ignored whilst the X-Factor and Sky footy takes precedence?

http://blogs.telegraph.co.uk/financ...k-of-englands-balance-sheet-in-two-centuries/


http://www.telegraph.co.uk/finance/economics/6815833/Inflation-rises-to-six-month-high-of-1.9pc.html

It is so true that we live in an age where the population is both politically and economically un-engaged...and the most disturbing fact about the X factor is that with it's 10m votes on saturday's Final, more people voted in the final than voted for this present govt to be in power...

Are the one world govt /illuminati conspiracy theorists right,? are the public being hoodwinked into being this un-engaged by the barrage of media and entertainment that is far easier for most to stay engaged with than the more thought provoking subjects that matter and will affect everyone's lives.

Conspiracy theories never die, (or do they?)

Good post by thread starter.

I don't believe that inflation is a foregone conclusion... I see no evidence of a direct link between the expansion of the CB's balance sheet and inflation. There's a whole variety of implicit assumptions people are making when they talk about the coming 'Great Inflation'. A lot of them make no sense.

Moreover, I don't see direct attempts to inflate the debt away. I see a conscious effort to weaken the ccy in hopes of making UK more competitive, which is not the same thing at all.

bbmac said:

It is so true that we live in an age where the population is both politically and economically un-engaged...and the most disturbing fact about the X factor is that with it's 10m votes on saturday's Final, more people voted in the final than voted for this present govt to be in power...

Are the one world govt /illuminati conspiracy theorists right,? are the public being hoodwinked into being this un-engaged by the barrage of media and entertainment that is far easier for most to stay engaged with than the more thought provoking subjects that matter and will affect everyone's lives.

Conspiracy theories never die, (or do they?)

Good post by thread starter.

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I'm often reminded of Prim Levi at times such as this. He actually felt more liberated in ways when imprisoned in death camps because bizarrely he had the 'freedom' to think and recognise the clarity of his situation. The focus of his anger (although terrifying) gave him the clearest reason for survival and rebellion against an unstopable force. Together with the ability to recognise the simple phenomena of right or wrong, at its most naked manifestation, must have been quite an experience..

I've often mused on whether our 'thinking' freedom has (en masse) been terminally damaged in recent times...The finger is pointed at, for example, China and N.Korea for their treatment of their 'citizens' with their frightening and brutal regimes exercising all manners of control. But are the masses really 'free' in our society given the constant bombardment of messages we're subjected to on a daily basis? Are we really free in our debt slave/politically obsessed culture where, for example, the liberalisation of home ownership has caused millions to fear against raging versus the political machine for fear of losing out finanically? "Fuel £1:15 a litre? Pffttt...got to get to work after dropping the kids off at pre-school and the wife at her second job..."

I'm watching the carefully choreographed treatment by the mainstream media of the BA cabin staff strike. Similar to the Royal Mail dispute there's no explanation of the grievances, the message is united and immediate; striking is wrong, bad, you must take one for the team, you must suffer with the rest of the UK as we all pull together to get us out of 'this mess' (which is always airbrushed off the agenda in favour of fluff in the news...). A mess most have been innocently contributing towards and have only indirectly caused by the levels of ignorance created..

Phew...that was a mind dump...thankfully my pairs are still in the right directions....Anyhow, someone please get this back on thread before Lightning Mc Queen 'Kerpows' cattle prods me and edits it back on message..hi-ho, hi-ho, it's off to....


Primo Levi quotes

"Monsters exist, but they are too few in numbers to be truly dangerous. More dangerous are…the functionaries ready to believe and act without asking questions."


"the sea's only gifts are harsh blows and, occasionally, the chance to feel strong. Now, I don't know much about the sea, but I do know that that's the way it is here. And I also know how important it is in life not necessarily to be strong but to feel strong, to measure yourself at least once, to find yourself at least once in the most ancient of human conditions, facing blind, deaf stone alone, with nothing to help you but your own hands and your own head..."

"Logic and morality made it impossible to accept an illogical and immoral reality; they engendered a rejection of reality which as a rule led the cultivated man rapidly to despair. But the varieties of the man-animal are innumerable, and I saw and have described men of refined culture, especially if young, throw all this overboard, simplify and barbarize themselves, and survive. A simple man, accustomed not to ask questions of himself, was beyond the reach of the useless torment of asking himself why."

"The harsher the oppression, the more widespread among the oppressed is the willingness, with all its infinite nuances and motivations, to collaborate: terror, ideological seduction, servile imitation of the victor, myopic desire for any power whatsoever… Certainly, the greatest responsibility lies with the system, the very structure of the totalitarian state; the concurrent guilt on the part of individual big and small collaborators is always difficult to evaluate… they are the vectors and instruments of the system’s guilt… the room for choices (especially moral choices) was reduced to zero…"

"A country is considered the more civilised the more the wisdom and efficiency of its laws hinder a weak man from becoming too weak and a powerful one too powerful."

"“Even in this place one can survive, and therefore one must want to survive, to tell the story, to bear witness; and that to survive we must force ourselves to save at least the skeleton, the scaffolding, the form of civilization. We are slaves, deprived of every right, exposed to every insult, condemned to certain death, but we still possess one power, and we must defend it with all our strength for it is the last — the power to refuse our consent.”"

People prefer not to think - it's easier. Constant entertainment is a way of achieveing it. X-factor is like going on Soma holiday. Picking one of the Huxley's quotes

"the warm, the richly coloured, the infinitely friendly world of soma-holiday. How kind, how good-looking, how delightfully amusing every one was! "

People don't vote anymore because it means they are responsible for the consequences of their actions and in 21st century Britain, nobody wants to be responsible for anything.

The government wants high inflation as it will erode the staggering debt we have and to help achieve this they will want to keep interest rates low in my view.


Paul

Trader333 said:

The government wants high inflation as it will erode the staggering debt we have and to help achieve this they will want to keep interest rates low in my view.


Paul

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That's a very interesting view. I'd never considered that as a possible strategy.

Trader333 said:

The government wants high inflation as it will erode the staggering debt we have and to help achieve this they will want to keep interest rates low in my view.


Paul

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I'm not sure about the gov't wanting high inflation...lest we forget the whole QE programme was about heading off spiraling deflation. So far it worked but at what cost and for how long!

It's actually easier to switch off and go watch X factor
Didn't the young geordie lad do well...great voice

Trader333 said:

The government wants high inflation as it will erode the staggering debt we have and to help achieve this they will want to keep interest rates low in my view.


Paul

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You're making the erroneous assumption that the government actually care about the state of the country. Their only raison d'etre is to pillage as much on expenses as possible (e.g. £20k for bell tower repairs) and to ensure their pensions keep them in the style to which they are accustomed. Brown has no interest in the state of the economy or the public debt; his focus now is entirely on ensuring his own survival, and failing that he will have a nice, gravy-laden job lined up in Brussels as reward for not putting the Lison treaty to a referendum.

counter_violent said:

....Didn't the young geordie lad do well...great voice

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I can't decide whether you are being ironic !! lol I do hope so

We're not going to see rampant inflation any time soon. The forthcoming cuts to public spending will necessarily be severe (look at what the Irish are doing) and this is in itself deflationary.

Think about this - if the BOE physically gave every individual in the country £10k (equivalent to £600bio), would inflation rise? Maybe not.. you might find that most people use it to pay down debt. Creating inflation is not quite as easy as it seems, just ask the Japanese.

robster970 said:

That's a very interesting view. I'd never considered that as a possible strategy.

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sorry, I don't get it...

counter_violent said:

I'm not sure about the gov't wanting high inflation...lest we forget the whole QE programme was about heading off spiraling deflation. So far it worked but at what cost and for how long!

It's actually easier to switch off and go watch X factor
Didn't the young geordie lad do well...great voice

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To announce he's a virgin just before Xmas and his number one hit comes out is a brilliant move...nice one son...

The forthcoming cuts to public spending will necessarily be severe (look at what the Irish are doing) and this is in itself deflationary.

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What cuts ? Last week they announced further increases in spending.


Paul

Black Swan said:

sorry, I don't get it...

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Replying to 333

The government wants high inflation as it will erode the staggering debt we have and to help achieve this they will want to keep interest rates low in my view.

Government would actually create a high inflationary environment to erode debt as they'll never tax enough or cut public sector enough to pay back at a reasonable rate. I'd just never considered high inflation as a policy in itself.

Last week's PBR was a sham, a phoney nothingness. The cuts are coming soon, let's hope they are voluntarily and thoughtfully implemented rather than forcefully imposed by the market. We cannot sustain borrowing of 14% of GDP, investors/the market will not tolerate it.

bbmac said:

I can't decide whether you are being ironic !! lol I do hope so

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Is it possible to be both serious and ironic

I watched a few of his performances and when it was announced that he had to duet with the legendary George Michael....I thought...ut oh...could come unstuck here.
But give the lad credit...no way was he outdone in terms of singing ability.

If he gets the right material going forwards...could be a world beater.....and I do hope so and that he pays lots in tax cos I have no intention of allowing the gov't anymore than is necessary of my money to fund their silly schemes.

meanreversion said:

Last week's PBR was a sham, a phoney nothingness. The cuts are coming soon, let's hope they are voluntarily and thoughtfully implemented rather than forcefully imposed by the market. We cannot sustain borrowing of 14% of GDP, investors/the market will not tolerate it.

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the cuts have to come from jobs, there is no alternative. 700K of government servants...

counter_violent said:

Is it possible to be both serious and ironic

I watched a few of his performances and when it was announced that he had to duet with the legendary George Michael....I thought...ut oh...could come unstuck here.
But give the lad credit...no way was he outdone in terms of singing ability.

If he gets the right material going forwards...could be a world beater.....and I do hope so and that he pays lots in tax cos I have no intention of allowing the gov't anymore than is necessary of my money to fund their silly schemes.

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always reminds me of a phone in on the Mark and Lard show in the 90's on R1, Mel C was being pestered by Sol Campbell for a date and to put it mildy she found him gross, he wanted one of those nice decorative famous wags and thought Beckham would put in a word for him (apparently). Anyhow Mark and Lard asked guys to phone in with song suggestions; "don't let the Sol go down on me..."

Well we've had an on and off raging debate about inflation in the "Weimar" thread, so it's hardly the elephant in the room (being ignored) on this forum. And I guess the same people will tend to line up in the same sort of way.

There are both inflationary and deflationary pressures on the horizon, so I suppose as usual it will be a question of balance.

Using inflation to erode debt is an old trick, but I thought we were supposed to have come a long way since then.

What RPI and CPI measures as inflation does not necessarily reflect the actual increased costs as seen by "the man on the Clapham omnibus" or the couch potato watching the X-Factor.

Speaking of the X-Factor, I happened to see highly-paid Simon Cowell on Newsnight talking to (also highly paid) Kirsty Wark (for a highly paid lady, she had a shocking hairdo - dragged through a hedge backwards more like). Resisting the urge to throw a brick while vomiting, I listened to him and it was actually quite interesting. He is proposing a sort of political X-factor, where people could get to vote on political issues. Well, I've long been a fan of referendums. If it has to be done this way, well so be it. It's better than not at all.