Interest rates 'may hit 8pc' in two years

Graham_Devon

Really2 wrote: »

Neither do I.

But you kind of miss the point of the article when you say that. It is based on a QE lead boom causing inflation.

And I don't want a major fight over this. But the point hasn't been missed.

I read that. I saw it.

But does a QE boom causing inflation, categorically mean that same QE boom will cause wage inflation?

No. So my point still stands.

I'm going to explain my thoughts a little more. Public sector wage rises, in my opinion, will be kept low as a means of controlling the inflation. So we could see inflation hitting a high peak, and in the midst of it working its way up to it's peak, the public sector wages kept well behind inflation to stop inflation spiralling, and to try and reign it in.

Whats more, there is no money to give inflation matching pay rises to the public sector. If the public sector get away with low wage rises, the private sector will follow suit.

Just my take. We've had below inflation rises for a while now. That's the reason I didn't see why yourself and chucky (and probably others) instantly in posts basically said inflation = wage inflation, and enough to push house prices up and keep pace with general inflation.

I believe there is much more to it.

Really2

Graham_Devon wrote: »

But does a QE boom causing inflation, categorically mean that same QE boom will cause wage inflation?

No. So my point still stands.

Sorry it does. (not your point, wage inflation would be a given in the scenario)

I will re-post that quote for you.

The "spiral" of increasing prices and wages, however, can only continue as long as the government continues to intervene in the economy by inflating the money supply.
As Hazlitt explained: "If it were not preceded, accompanied, or quickly followed by an increase in the supply of money, an increase in wages above the "equilibrium level" would not cause inflation; it would merely cause unemployment. And an increase in prices without an increase of cash in people's pockets would merely cause a falling off in sales. Wage and price rises, in brief, are usually a consequence of inflation. They can cause it only to the extent that they force an increase in the money supply."

Without the wages there will be no boom, inflation would mean people have less to spend so falling sales.

chucky

you don't need wage inflation across 100% of home owners to have HPI.

with the current level of transactions about 25%

chucky

Really2 wrote: »

Sorry it does.

I will re-post that quote for you.


Without the wages there will be no boom, inflation would mean people have less to spend so falling sales.

exactly - you can't have increased asset or goods prices if nobody is buying them. there needs to be income and the only real way to get this increased income is wage inflation because it ain't going to be more income because of less taxation...

Exocet

Is it possible to have have external inflation, from imported goods and commodities, and a falling currency? Then you don't need internal pressure such as wages rising to create inflationary pressures.

It's complicated this economy stuff. That's why no one really knows what is going to happen. Makes investing exciting... or scary.

chucky

Exocet wrote: »

Is it possible to have have external inflation, from imported goods and commodities, and a falling currency? Then you don't need internal pressure such as wages rising to create inflationary pressures.

It's complicated this economy stuff. That's why no one really knows what is going to happen. Makes investing exciting... or scary.

come on sunshine - we did this on Page 3!!!

this is basic forumonics!!!

you're better than that

Exocet

chucky wrote: »

come on sunshine - we did this on Page 3!!!

this is basic forumonics!!!

you're better than that

Believe it or not, I only joined on the end of this thread, I didn't feel my life was long enough to read all of it.

Imported inflation. Might not happen of course. If it doesn't then my guess would be it's because Asia has taken a tumble.

chucky

Exocet wrote: »

Believe it or not, I only joined on the end of this thread, I didn't feel my life was long enough to read all of it.

Imported inflation. Might not happen of course. If it doesn't then my guess would be it's because Asia has taken a tumble.

it may have been Page 4 - my bad

mystic_trev

For most of us, it is hard to imagine that one day we might be pining for the 'good old days' of summer 2010. With the recovery faltering, the deficit yawning and the Treasury axe being sharpened, you might have thought that the present economic picture could hardly get worse.

But if one expert's chilling prediction is right, then far grimmer times may lie ahead for British homeowners. As if they did not have to shoulder enough burdens already, they could end up facing mortgage repayments three times today's level, with horrific consequences for our economy.

http://www.thisismoney.co.uk/news/article.html?in_article_id=512696&in_page_id=2&ct=5

Really2

mystic_trev wrote: »

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http://www.thisismoney.co.uk/news/article.html?in_article_id=512696&in_page_id=2&ct=5
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Yet another article which fails to understand what the guy is saying.

Why would home owners not want inflation brought on by a boom (the guy's prediction is a QE caused boom in the 8% scenario).

Bad new = Interest payments go up.

Good news = Wages go up, debt deflates.

I am really glad this place exists, the press really don't have a Scooby Doo.