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  • FIRST POST
    • missile
    • By missile 8th Oct 16, 6:27 AM
    • 8,322Posts
    • 3,949Thanks
    missile
    The pound in my pocket
    • #1
    • 8th Oct 16, 6:27 AM
    The pound in my pocket 8th Oct 16 at 6:27 AM
    I can understand why the suits in the square mile don't want the euro but would it bad for the rest of us? I have seen the value of the £ in my pocket plummet against the € .... and not just since Brexit.
    "A nation's greatness is measured by how it treats its weakest members." ~ Mahatma Gandhi
    Ride hard or stay home
Page 2
    • Linton
    • By Linton 12th Oct 16, 11:23 AM
    • 6,946 Posts
    • 6,542 Thanks
    Linton
    No, it wasn't true in 1967 and isn't true now. The years following 1967 brought inflation of up to 24% as a result.

    ....
    Originally posted by Rollinghome
    Inflation didnt reach 24% until 8 years later in 1975. Blaming this on a 14% devaluation in 1967 seems a little far-fetched. A far greater cause was surely economic mismanagement in the subsequent years.
    • Thrugelmir
    • By Thrugelmir 12th Oct 16, 11:45 AM
    • 51,277 Posts
    • 43,081 Thanks
    Thrugelmir
    A far greater cause was surely economic mismanagement in the subsequent years.
    Originally posted by Linton
    The era of the 3 day week and all that went with it. 1973 and OPEC's stranglehold on the oil price began!
    “A man is rich who lives upon what he has. A man is poor who lives upon what is coming. A prudent man lives within his income, and saves against ‘a rainy day’.”
    • lesta1980
    • By lesta1980 12th Oct 16, 2:44 PM
    • 92 Posts
    • 20 Thanks
    lesta1980
    Are you stalking me? <LOL>
    I find it interesting to compare the differing views / opinions on this issue from both forums.
    Originally posted by missile
    proper threw me for a couple of minutes, I believe I commented quite early as well with a similar username to this
    • Rollinghome
    • By Rollinghome 12th Oct 16, 4:37 PM
    • 2,037 Posts
    • 2,185 Thanks
    Rollinghome
    Inflation didnt reach 24% until 8 years later in 1975. Blaming this on a 14% devaluation in 1967 seems a little far-fetched. A far greater cause was surely economic mismanagement in the subsequent years.
    Originally posted by Linton
    You seem to want to make a vague political point rather than an economic one. It's a view widely accepted that it was the devaluation of 1967 that set the hare running for the inflation that followed and that view seems anything but "far-fetched", and in fact highly plausible.

    In 1967 there hadn't been double digit inflation since the beginning of WW2 and in the couple of years immediately preceding 1967 the rate was falling - down from 4.8% to reach just 2.5% in 1967. After the 1967 devaluation the rate then turned direction and trended relentlessly upwards, rising in every single year apart from one minor respite in 1972 from 9.4% to 7.1%, before continuing upwards again the following year to peak at 24.5% in 1975. There certainly wasn’t a single factor but that tends to be the way inflation works, an initial trigger followed by increasing momentum.

    You might choose to argue that greater political resistance to wage demands would have helped or more obviously that the rise in oil prices stoked the fire but that wouldn't be a counter argument to the view that the initial trigger was the earlier devaluation and the immediate effect it had on prices and then wage demands.
    • Linton
    • By Linton 12th Oct 16, 4:59 PM
    • 6,946 Posts
    • 6,542 Thanks
    Linton
    You seem to want to make a vague political point rather than an economic one. It's a view widely accepted that it was the devaluation of 1967 that set the hare running for the inflation that followed and that view seems anything but "far-fetched", and in fact highly plausible.

    In 1967 there hadn't been double digit inflation since the beginning of WW2 and in the couple of years immediately preceding 1967 the rate was falling - down from 4.8% to reach just 2.5% in 1967. After the 1967 devaluation the rate then turned direction and trended relentlessly upwards, rising in every single year apart from one minor respite in 1972 from 9.4% to 7.1%, before continuing upwards again the following year to peak at 24.5% in 1975. There certainly wasn’t a single factor but that tends to be the way inflation works, an initial trigger followed by increasing momentum.

    You might choose to argue that greater political resistance to wage demands would have helped or more obviously that the rise in oil prices stoked the fire but that wouldn't be a counter argument to the view that the initial trigger was the earlier devaluation and the immediate effect it had on prices and then wage demands.
    Originally posted by Rollinghome
    No political points - governments of both parties were in power over the period in question.

    The relatively small drop in the £ in 1967 didnt happen in a vacuum. It was forced on the then government by global economic forces that eventually led to the collapse of the fixed currency rate system. So a symptom rather than a cause of what subsequently happened.

    Note that a far higher devaluation in the £ occured in the 1981-1985 time frame without the same very high inflation rates.
    • Rollinghome
    • By Rollinghome 12th Oct 16, 5:18 PM
    • 2,037 Posts
    • 2,185 Thanks
    Rollinghome
    Note that a far higher devaluation in the £ occured in the 1981-1985 time frame without the same very high inflation rates.
    Originally posted by Linton
    But that isn't surprising is it. We notice fast changes more than we do gradual changes over several years. For wage inflation there also needs to be the means to exact demands which was greatly deminished in the 1980s .
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