The elephant in the room just got bigger

carolt

And which elephant might that be? You'll have to read the article to find out :

http://business.timesonline.co.uk/tol/business/columnists/article7130225.ece

Blacklight

The figures will provide fuel for the conspiracy theorists who believe that the Government and the bank are deliberately stoking inflation to ease the country’s debt burden.

That's a no-brainer.

lynzpower

Perhaps, if 2010 is 1974 all over again, it is no surprise to see the CBI and TUC chucking rotten vegetables at each other. In its public services action plan for the new Government, the CBI’s Richard Lambert today calls for a freeze in the public sector wage bill and the elimination of tens billions of pounds of staff duplication and waste.

In response, the TUC’s Brendan Barber accuses the CBI of “special pleading” to get its members on a gravy train of quasi-privatisation of public-sector services.

Of course, there is some special pleading. Some of the more radical ideas for public service reform involve the private sector, and the big outsourcing companies are licking their lips at the prospects.

CBI members will also be hoping that the cuts are focused on the public sector and not on support for the private sector.

Mr Lambert admits to concerns that Labour pledges to support the motor and renewable energy industries could be “thrown into juddering reverse” by the new administration.

Of course the private sector will win out- to create a hyper inflation as they ramp thier prices beyond what the taxpayer can afford- PFI style.

Depressing that apparently the greatest minds this country has got comes up with this pile of old capr.

carolt

And here's the Guardian's take on it:

http://www.guardian.co.uk/business/2010/may/18/inflation-rise-what-the-experts-say

Note expert 1 who is predicting "potentially double-digit inflation". :eek:

drc

Why is he so reticent to raise interest rates?

Is it worth investing now in NS&I index linked certificates?

lynzpower

drc wrote: »

Why is he so reticent to raise interest rates?

Is it worth investing now in NS&I index linked certificates?

This might be a stupid question as inflation isnt my strong point but isnt it the case that if IRs went up, the housing costs would go up and therefore inflation would rise further?

IR rises on those mortgages, plus the rise in VAT plus national insurance rise is going top stuff us all ways.

chucky

lynzpower wrote: »

This might be a stupid question as inflation isnt my strong point but isnt it the case that if IRs went up, the housing costs would go up and therefore inflation would rise further?

IR rises on those mortgages, plus the rise in VAT plus national insurance rise is going top stuff us all ways.

i think that's what they'd want to do...

what happens if/when VAT goes to 20%... current inflation +2.5% straight away...

Harry_Powell

There are a lot more ways to control inflation other than using interest rates.

kennyboy66_2

carolt wrote: »

And here's the Guardian's take on it:

http://www.guardian.co.uk/business/2010/may/18/inflation-rise-what-the-experts-say

Note expert 1 who is predicting "potentially double-digit inflation". :eek:

The James Hughes (Black Swan Capital wealth management) quote

"We'll have to go through a period of high inflation in order to fully recover and put the economy on a solid footing, with sterling at a lower but more appropriate level.
High, potentially double-digit inflation is essential to the recovery of the UK's economy. The inflation that is heading our way is the most effective medicine for indebtedness, albeit one that is hard to swallow."


This is about the most wrong headed thing I have ever read in my life - is he mentally deranged ?


What is required is the pound to stay at roughly its same level - maybe a bit lower, very mild inflation (less than 3.5% but more than 2%), but most importantly the Government to spend at a rate less than the inflation rate (either by squeezing pay & benefits or cutting jobs).


With the political will it will take 8-10 years to get the nations finances back on an even keel. All this 'our childrens, children' stuff is a load of bull.

Wookster

People forget just how damaging inflation really is.

5.7% (what we currently have) represents a pretty big (negative) lifestyle impact for many many people.

Harry_Powell

It's not bad for those on long term fixed mortgages.