Inflation or Deflation, where are we going ?

ad9898_3

I can't make my mind up, the economy seems to be going in deflationary way for now, will it change ?, will the government intervene ?, and if they do introduce QE, could it spiral out of control ?

I've included a poll for good measure.

Wookster

I think possibly 2 years of deflation of asset prices and then damagingly high inflation of essentials (>10%) and continued deflation of asset prices thereafter.

Edit: thats not a poll option so I didn't vote.

Really2

Deflation untill QE can plug the world wide losses.

Then to tell you the truth I think very low inflation.

PS Wookster you have got to be !!!!!! or his clone.;) I would say high inflation in two years was inflation.

purch

I've included a poll for good measure

You havn't been paying attention.

Unless you use the exact wording that Wookie uses (repeatedly :eek: ) then he won't play !!!!

Wookster

purch wrote: »

Unless you use the exact wording that Wookie uses (repeatedly :eek: ) then he won't play !!!!

I might be a bit pedantic

piggeh

marginal inflation under 1% for 2-3 years

JP45

ad9898 wrote: »

I can't make my mind up, the economy seems to be going in deflationary way for now, will it change ?, will the government intervene ?, and if they do introduce QE, could it spiral out of control ?

I've included a poll for good measure.

If I had to put money on it, I'd say a couple of years of deflation followed by a return of inflation, possibly into double digits. But as Stephanie Flanders points out, there is an unusually wide range of opinions right now amongst economists which makes planning for the future extraordinarily difficult.

http://www.bbc.co.uk/blogs/thereporters/stephanieflanders/2009/02/has_goldilocks_gone_for_good.html

Personally, I'm going to plan on the basis of a brief (2 to 3 year) return to double digit inflation, prompted by quantitative easing and a fall in the value of sterling, but with the hope / expectation that the Bank of England will take the necessary steps to bring inflation back under control.

I don't subscribe to the more alarmist view that we could end up with Weimar / Zimbabwe style hyperinflation. That to me would suggest a complete collapse in the value of sterling in relation to other currencies. But I just cannot see how other currencies would remain immune given the global nature of the downturn.

dandy-candy

Isn't inflation already happening on some places? A friend of mine says her parents who live in the Ukraine can no longer afford to buy meat anymore as the prices over there are skyrocketing - does anyone else have contacts abroad experiencing similar?

lostinrates

I nterestingly the price of tripe, in UK, has really shot up. In trying to sorce it I keep coming up with the reply that because they are eating more tripe eleswhere in Europe as a budget food its seriously limiting the amount of green tripe available for dog food.

I bet tripe increase inprice would show a very high impact on my personal inflation in calculated!

Wookster

JP45 wrote: »

http://www.bbc.co.uk/blogs/thereporters/stephanieflanders/2009/02/has_goldilocks_gone_for_good.html

Good article that.

I don't subscribe to the Weimar/ Zimbabwean inflation crisis either but frankly 10% inflation in the UK for 2-3 years would be enormously damaging.

I suspect what is more likely to cause inflation here is a run on the pound caused by a market crisis of confidence in the Labour government. QE, coupled with the second biggest annual budget deficit after the US, all at such an early stage into what looks increasingly like a crisis of 1930s order magnitude.

StevieJ

Don't know