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A stern warning from a central banker
smeagold
Posts: 1,429 Forumite
Mervyn King is Britain’s chief central banker and a key figure in the global financial system. Last week, after surprising reports surfaced that the British economy had once again contracted in the 4th quarter of last year, King delivered a stern, sobering message to his country:
- “In 2011, real wages are likely to be no higher than they were in 2005… One has to go back to the 1920s to find a time when real wages fell over a period of six years.”
- “The Bank of England cannot prevent the squeeze on real take-home pay that so many families are now beginning to realise is the legacy of the banking crisis and the need to rebalance our economy.”
- “The squeeze on living standards is the inevitable price to pay for the financial crisis and subsequent rebalancing of the world and UK economies.”
- Furthermore, inflation may rise “to somewhere between four per cent and five per cent over the next few months.”
- “The idea that the MPC could have preserved living standards, by preventing the rise in inflation without also pushing down earnings growth further, is wishful thinking.”
- “npleasant though it is, the Monetary Policy Committee neither can, nor should try to, prevent the squeeze in living standards, half of which is coming in the form of higher prices and half in earnings rising at a rate lower than normal.”
- “I sympathise completely with savers and those who behaved prudently now find themselves among the biggest losers from this crisis.”
To summarize, one of the world’s leading central bankers has looked his country in the eye and admitted that he is completely powerless to prevent the inevitable decline in living standards that will result from years of reckless behavior.
It’s amazing that someone in his position would be so terse, so direct in his appraisal of the situation; by nature of their positions, central bankers are serial liars who must continually deceive the public in order to set expectations and carry out their agenda.
King’s statement may be a sign that England is finally on its last leg.
http://www.sovereignman.com/expat/a-stern-warning-from-a-central-banker/
anyone waking up yet?
- “In 2011, real wages are likely to be no higher than they were in 2005… One has to go back to the 1920s to find a time when real wages fell over a period of six years.”
- “The Bank of England cannot prevent the squeeze on real take-home pay that so many families are now beginning to realise is the legacy of the banking crisis and the need to rebalance our economy.”
- “The squeeze on living standards is the inevitable price to pay for the financial crisis and subsequent rebalancing of the world and UK economies.”
- Furthermore, inflation may rise “to somewhere between four per cent and five per cent over the next few months.”
- “The idea that the MPC could have preserved living standards, by preventing the rise in inflation without also pushing down earnings growth further, is wishful thinking.”
- “npleasant though it is, the Monetary Policy Committee neither can, nor should try to, prevent the squeeze in living standards, half of which is coming in the form of higher prices and half in earnings rising at a rate lower than normal.”
- “I sympathise completely with savers and those who behaved prudently now find themselves among the biggest losers from this crisis.”
To summarize, one of the world’s leading central bankers has looked his country in the eye and admitted that he is completely powerless to prevent the inevitable decline in living standards that will result from years of reckless behavior.
It’s amazing that someone in his position would be so terse, so direct in his appraisal of the situation; by nature of their positions, central bankers are serial liars who must continually deceive the public in order to set expectations and carry out their agenda.
King’s statement may be a sign that England is finally on its last leg.
http://www.sovereignman.com/expat/a-stern-warning-from-a-central-banker/
anyone waking up yet?
Hi, we’ve had to remove your signature. If you’re not sure why please read the forum rules or email the forum team if you’re still unsure - MSE ForumTeam
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Comments
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I think this confirms that the BOE will be keeping rates low while inflation reduces the value of take home pay. However given the situation I can't see that they have any choice. Put rates up and the economy will suffer even more. All a bit of a mess really.0
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Apparently living standards are indeed going back to where they were in 2005. Gutted!“I could see that, if not actually disgruntled, he was far from being gruntled.” - P.G. Wodehouse0
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It is a mess yes theres no easy way out now the damage is done, now comes the fallout, Don't imagine for a moment that IRs wont go up cos the economy will suffer, it's gone far beyond that now, IRs must rise, the situation is now beyond the BoEs controlHi, we’ve had to remove your signature. If you’re not sure why please read the forum rules or email the forum team if you’re still unsure - MSE ForumTeam0
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[quote=[Deleted User];40817510]I think this confirms that the BOE will be keeping rates low while inflation reduces the value of take home pay. However given the situation I can't see that they have any choice. Put rates up and the economy will suffer even more. All a bit of a mess really.[/QUOTE]
Backed into a corner.
They should have put the brakes on earlier, much earlier. Build an economy on low interest rates, and it will come to rely on low interest rates.30 Year Challenge : To be 30 years older. Equity : Don't know, don't care much. Savings : That's asking for ridicule.0 -
It’s amazing that someone in his position would be so terse, so direct in his appraisal of the situation; by nature of their positions, central bankers are serial liars who must continually deceive the public in order to set expectations and carry out their agenda.
King’s statement may be a sign that England is finally on its last leg.
http://www.sovereignman.com/expat/a-stern-warning-from-a-central-banker/
anyone waking up yet?
So why don't you think he is telling lies? I know he is saying what you wish to hear
'Just think for a moment what a prospect that is. A single market without barriers visible or invisible giving you direct and unhindered access to the purchasing power of over 300 million of the worlds wealthiest and most prosperous people' Margaret Thatcher0 -
So why don't you think he is telling lies? I know he is saying what you wish to hear
for sure he's telling lies if he says it will be bad you can be sure it will be far worse than just bad. your just being preped for more bad news. he's been predicting sub 2% inflation for over 2 years and got that wrong 96% of the time.. Bernanke said 'the last duty of a central banker is to tell the people the truth' and merv is just another central banker. His duty is to the rich, not you, they don't care about you. smell the coffee yet?Hi, we’ve had to remove your signature. If you’re not sure why please read the forum rules or email the forum team if you’re still unsure - MSE ForumTeam0 -
It is a mess yes theres no easy way out now the damage is done, now comes the fallout, Don't imagine for a moment that IRs wont go up cos the economy will suffer, it's gone far beyond that now, IRs must rise, the situation is now beyond the BoEs control
I don't think IRs will go up in the short-term. Most of the inflationary pressure we're experiencing is from overseas, so hiking our IRs up won't have any affect on that. It would, however, damage one of our growth areas, exports, as high IRs will push the exchange rate up.0 -
for sure he's telling lies if he says it will be bad you can be sure it will be far worse than just bad. your just being preped for more bad news. he's been predicting sub 2% inflation for over 2 years and got that wrong 96% of the time.. Bernanke said 'the last duty of a central banker is to tell the people the truth' and merv is just another central banker. His duty is to the rich, not you, they don't care about you. smell the coffee yet?
The BoE inflation model is very good. It's not good at predicting unforeseen events (severe weather, political upheaval, etc). It's very easy to sit here as say that the BoE were wrong on inflation today, when looking that the predictions that they made 2 years ago; it's much hard to say what inflation is going to look like 2 years hence.
If you think it’s that easy to predict inflation accurately, what is your prediction for inflation over the next 2 years then?0 -
mid summer spike to 5% fall back to 4% autumn, after that who knows, thems official stats, real inflation is about 8%Hi, we’ve had to remove your signature. If you’re not sure why please read the forum rules or email the forum team if you’re still unsure - MSE ForumTeam0
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