This article pretty much details what is round the corner imo.
Hopes of rate cut dashed as fastest rise in fuel prices ever pushes inflation higher | Mail Online
It is dated Feb 08 almost 1.5 years ago.
Reason for the inflation back then was down to food and fuel. CPI maxed at around 5.3%.
If in the worst depression inflation is at 2% (and that is a big under estimated lie in itself) what will prices be once growth is underway?
-----------------------------
I didn't say we are in a depression because we are not, we are in a reccession at the moment....if by some miricle everything stabalises then its possible to stave off the depression. Prices cannot rise while house prices are lower and at significant risk of being even lower still. Wages are not going up ...jobs are still being lost and spending power is diminished....the worry is that all of this will continue along this path and lead to deflationary pressures and if that happens then it's not even worth thinking about...suffice to say, there won't be enough lifeboats.
---------------------------------
If in the worst depression oil is at $70-75 now who is to say $150 will not be achieved again. If dollar continues to fall halving in value then oil at $300 is not beyond imagination. Bear in mind falling currencies can also import inflation.
------------------------------
In another thread you talk about everything reverting to equilibrium....so which is it...bubbles on bubbles or everything reverting back to the mean ?
There is more chance of seeing $30 dollar oil.
-------------------------------------
Similarly as growth gets going billions of Indians and Chinese will start eating again. Food prices will rise again.
-----------------------------------
They all stopped eating did they ? Or did they all stop consuming luxury unnecessary items which they didn't need in the first place.
---------------------------------
What is going to be any different now to what was back then?
-----------------------------------
The difference is clear. Lack of available funds and relatively expensive credit and little appetite to go on more spending sprees...Have you considered that Joe public may just have wised up now to what is going on in the world...we could easily see everyone winding their necks in for the next ten years or so...until such time as all this is forgotten and the next generation repeats the same mistakes.
---------------------------------------
This time round pressures are external to our economies and likely to be supply side issues as opposed to demand thus unemployment and the traditional Philips curve relationship with inflation is breaking down. Stagnation is becoming a distinct possibility imo.