ECB Chief Warns of stoking the fires (of inflation)

Wookster

http://www.independent.co.uk/news/business/news/trichet-warns-against-stoking-future-crisis-1624010.html

The president of the European Central Bank warned yesterday that short-term measures aimed at solving the economic and financial turmoil could sow the seeds of a future crisis.

Jean-Claude Trichet told the European Parliament that there would be no solution to the financial and economic crisis until the structural problems in the world economy were corrected.
M. Trichet said the world remained out of balance in terms of the financial system, macroeconomic factors, and governance of the financial sector.
"The present crisis does not just offer us an opportunity to rebalance, it provides an obligation to rebalance these three intertwined domains of the global economy," M. Trichet said. "And yet we also need to make sure that our decisions today do not lay the ground for similar disorder in the future."

Everyone else can see that QE is madness. When will Crash listen??

ad44downey

Hyper inflation is just around the corner thanks to the nonsense of slashing interest rates.

Dithering_Dad

Hyper inflation? What can we do to protect ourselves?

I know, buy a house right now for as much as one can afford, say £400k, and then pay it off for the price of a loaf of bread when we are all millionaires. Make sure to get a fixed interest rate on that mortgage though.

How many of the posters who are pushing the alarmist 'hyper inflation' message are doing this? Ah yes, not a single one of them.

purch

ECB chief warns of dangers of Inflation !!!

Wow...........that's News !!!! :T

Must be the first time the ECB has warned of the dangers of Inflation for all of 30 minutes :eek:

P.S. hey Wookey................where is the mention of Inflation in that piece you have pasted ??

macaque_2

Dithering_Dad wrote: »

Hyper inflation? What can we do to protect ourselves?

I know, buy a house right now for as much as one can afford, say £400k, and then pay it off for the price of a loaf of bread when we are all millionaires. Make sure to get a fixed interest rate on that mortgage though.

How many of the posters who are pushing the alarmist 'hyper inflation' message are doing this? Ah yes, not a single one of them.

The answer is obvious.

1. High inflation does not imply that all prices will rise at the same rate. In fact, inflation often becomes the default mechanism for correcting anomilies. Currently people in the UK are over paid (especially in the public sector) compared to other developed countries. We are already seeing below inflation pay awards. Since houses are already overpriced, they will also lag behind inflation until lenders feel comfortable with the ratio of prices to earnings.

2. The cure for inflation is even higher interest rates. People with £400k mortgages under those conditions face certain bancrupcy.

purch

Hyper inflation is just around the corner thanks to the nonsense of slashing interest rates

Surely you mean the "nonsense of printing money willy nilly like Zimbabwe and the Weimar Republic" !!!!!!!!!!!!!!

Dithering_Dad

My retort in red below...

macaque wrote: »

The answer is obvious.

1. High inflation does not imply that all prices will rise at the same rate. In fact, inflation often becomes the default mechanism for correcting anomilies. Currently people in the UK are over paid (especially in the public sector) compared to other developed countries. We are already seeing below inflation pay awards. Since houses are already overpriced, they will also lag behind inflation until lenders feel comfortable with the ratio of prices to earnings.

These guys are not talking about high inflation, they're talking about hyper inflation ala Zimbabwe where a loaf of bread costs a million quid and people are being paid trillions. In that scenario, a £400k debt could be paid off with pocket change.

2. The cure for inflation is even higher interest rates. People with £400k mortgages under those conditions face certain bancrupcy.

That's why I mentioned the bit about making sure you get a fixed rate mortgage.

chucky

Wookster wrote: »

http://www.independent.co.uk/news/business/news/trichet-warns-against-stoking-future-crisis-1624010.html



Everyone else can see that QE is madness. When will Crash listen??

it's the ECB putting politcal pressure on the UK to join the Euro.

i thought that QE that was going to happen was creating money to buy government bonds.

why do these people compare it to what dictatorships like Zimbabwe and Argentina have done when they directly pushed it into the money supply and created hyper-inflation.

it's nothing of the sort