inflation, money and houses

justme111

Please tell me whether I think right (disclaimer - I undesrstand nothing in economics, just enjoy reading mse forums in free time, what a pervet I am:D ).
Once inflation hits ( I kind of can sniff it in the air, it can not not to hit) the only asset ordinary people see to protect their money ( I feel like savers are always punished, I am from ex-USSR where in 3 days ALL the savings were swiped away, my dad lost an equivalent of 2 one bedroom flats in a decent area) will be property so we will desperatly buy anything.
What do you think about this prognosis?
What can I do so as not to lose in this race? ( I am a wannabe ftb trying to save for a deposit)

ad9898_3

While Gordenron may go down this route, has he has zero credibility now, I don't see it on the cards just yet. He still wants to be seen as the 'great financial mind of our time', this delusion he has may save us from hyperinflation...... for a while anyway.

Generali

If you are concerned about inflation, the obvious investments are index linked gilts or an index linked national savings account. They pay RPI (the most 'correct' measure of inflation IMO) plus a small premium.

It is unlikely that inflation will suddenly go from 3% to 300%. Having said that a couple of years ago it was unlikely that the banking system would need $8,000,000,000,000 of tax payers' money (or whatever it is).

justme111

Thank you
I think it does not need to be 300% for people trying to get hold of whatever property they see available. Or does it?
Or it really does not matter as so minuscule part of the populations saves for deposit it can be disregarded?

Generali

justme111 wrote: »

Thank you
I think it does not need to be 300% for people trying to get hold of whatever property they see available. Or does it?
Or it really does not matter as so minuscule part of the populations saves for deposit it can be disregarded?

300% is a figure I plucked from the air. The highest that inflation has been in the UK in modern times is below 30% pa.

Most people put cash into a FTB purchase most of the time. The past few years have been unusual in that so many FTB purchases were on 100% mortgages.

Mary_Hartnell

And borrowed it from poor people in third world countries instead?

WTF?_2

justme111 wrote: »

Please tell me whether I think right (disclaimer - I undesrstand nothing in economics, just enjoy reading mse forums in free time, what a pervet I am:D ).
Once inflation hits ( I kind of can sniff it in the air, it can not not to hit) the only asset ordinary people see to protect their money ( I feel like savers are always punished, I am from ex-USSR where in 3 days ALL the savings were swiped away, my dad lost an equivalent of 2 one bedroom flats in a decent area) will be property so we will desperatly buy anything.
What do you think about this prognosis?
What can I do so as not to lose in this race? ( I am a wannabe ftb trying to save for a deposit)

I think you're spot on - basically once strong inflation hits houses are one of the few areas you can put your money into to protect its value.

Gold and foreign currency is another - but 'gains' made are taxable (CGT) and they are also vulnerable to government control which would definitely be introduced when or before the money printing starts.

amcluesent

The length and nature of the hiatus before inflation returns to Britain will be very interesting.

Now that Clown has thrown out all the NuLabour 'pledges', effectively returning to the "Clause 4" Labour of nationalisation, 'picking winners', tax, borrow and spend, it would be reasonable to think that inflation come back too.

The question is whether the capital markets and other externalities will prevent running the printing presses etc.

WTF?_2

amcluesent wrote: »

The length and nature of the hiatus before inflation returns to Britain will be very interesting.

Now that Clown has thrown out all the NuLabour 'pledges', effectively returning to the "Clause 4" Labour of nationalisation, 'picking winnders', tax, borrow and spend, it would be reasonable to think that inflation come back too.

The question is whether the capital markets and other externalities will prevent running the printing presses etc.

Nothing can stop Gordonomics. He figures he can control everything and make things happen in the economy by dictat.

Even telling the public about stuff the government doesn't want you to hear can land you being arrested and having anti-terrorist police searching your parliamentary office these days.

Won't be long before we see 'anti-terror' laws and organisations being deployed more widely against the general public - Brown and his increasingly autocratic chums are a menace.

Dithering_Dad

!!!!!!? wrote: »

IGold and foreign currency is another - but 'gains' made are taxable (CGT) and they are also vulnerable to government control which would definitely be introduced when or before the money printing starts.

There is no cap gains or VAT on Gold Sovereigns because they're classed as currency. If the tin foil brigade want to hide their money then they can buy sovs. However, I suspect it more likely that you could lose your wealth in a fire or robbery than with Zimbabwe style hyper inflation.

However, you makes your choices and you takes your chances.

Interesting that !!!!!! is increasingly vocal about his hyper inflation prediction yet has not done anything about it. He sold his gold and he hasn't bought a house. One would protect his wealth due to its intrinsic value, the other could be paid off with one week's income of £1M if we go down the Zimbabwe route. It's laughable that !!!!!! makes these outlandish financial prdictions, it's regrettable that the feeble minded listen to him.

My advice? Listen to people who follow their own advice. Simple as.

purch

Once inflation hits the only asset ordinary people see to protect their money will be property so we will desperatly buy anything.
What do you think about this prognosis?

Why do you think that ordinary people will see property as the only way to protect their savings ??

It has never been that case in the past, property prices go up when greed sets in, it's not asset protection driven.

The events of the last 12 months will hardly make property the #1 choice for those seeking to preserve wealth.