A Question for Economists

Generali

patchwork_cat wrote: »

I have a question for economists.

Inflation has averaged around the 5% mark for the last couple of years (aware it is not rising quite so quickly now) and in real terms for us as a family made of a public sector employee and a SAHM we are £300 approx worse off than 2 years ago.

Inflation however is still growing and yet we have significantly less available income and goods are only worth what people are prepared to pay for them.

We are continually being told that the public sector had it good and the private sector is much worse off with redundancies and massive pay cuts flying around.

So why is inflation still rising if there is less available money?:question:

My belief is that inflation is at all times and in all places a monetary phenomenon.

If prices are rising it's because the amount of money available for purchases is rising faster than the amount of goods and services that money can buy.

That might not reflect your situation (and it doesn't reflect mine) but it must be true by definition that if inflation is rising it means that the amount of money available to buy stuff is rising faster than the amount of stuff.

CLAPTON

maybe an economism would
-ask what is meant by inflation
-whether or not is it always a monetry phenomenon
and observe that if it is a monetry phenomenon then the quantity of money must span the scope of the product mix i.e. for products freely traded throughtout the world then the quantity of money relevant is the world's money supply

patchwork_cat

Generali wrote: »

My belief is that inflation is at all times and in all places a monetary phenomenon.

If prices are rising it's because the amount of money available for purchases is rising faster than the amount of goods and services that money can buy.

That might not reflect your situation (and it doesn't reflect mine) but it must be true by definition that if inflation is rising it means that the amount of money available to buy stuff is rising faster than the amount of stuff.

TBH that was my take on the situation.Some people are obviously paying off more of the country's debt than others.

I was wondering how much the current low interest rates and therefore lots of peoples low mortgage repayments had on the available income.

Conrad

StevieJ wrote: »

And there is me thinking that those leftys were all protesting against globalisation and it was the Capitalists who were promoting it to take advantage of cheap Labour and expanding markets. I got that totally wrong, thanks for putting me right

Lefties interfere endlessly in Africa dolling out money that leads to inept Governments - who needs to bother building society from the ground up when they know a fat cheque will hit the doormat, courtesy of those guilt ridden white middle classes.

Rather than infantalise poor foreigners, instead trust them to sort themselves out (apart from emmergency food aid in extremis). If it weren't for aid, perhaps populations would have risen up and demanded change from thier ruling classes.

Then you have organisations such as 'Which', that endlessly emplore poeple to shop around for cheapest tyres and what not. I have found leftwing teacher types love that magazine and remorsesly follow it's moneysaving tips, and that of course means lower wages for Chinese and others. YOU demand best value tyres, devices, dvd's and so on, so YOU cause others to suffer on low wages. Stop excusing your actions by blaming it on big business.

vivatifosi

Conrad wrote: »

Then you have organisations such as 'Which', that endlessly emplore poeple to shop around for cheapest tyres and what not. I have found leftwing teacher types love that magazine and remorsesly follow it's moneysaving tips, and that of course means lower wages for Chinese and others. YOU demand best value tyres, devices, dvd's and so on, so YOU cause others to suffer on low wages. Stop excusing your actions by blaming it on big business.

Um, excuse me for mentioning this, but if you don't like that type of thing, why are you hanging out on a website called Moneysavingexpert?

ruggedtoast

ILW wrote: »

Why does anyone pay £3.00 for a takeaway coffee from Starbucks?
That truly is a mystery to me.

Because it makes you feel warm and fuzzy inside.

ILW

ruggedtoast wrote: »

Because it makes you feel warm and fuzzy inside.

So does Samonella.

Thrugelmir

Conrad wrote: »

Example, China now sucks in huge quantities of rubber, meaning things like tyres are getting more expensive.

My late father worked for the last quoted UK based rubber plantation Company. The Chinese bought the Company in 1967.

The Chinese only hold one view long term. Nothing is ever done short term. There's a purpose to whatever they do.

Radiantsoul

I think what is happening is that wealth and income is being redistributed away from the "West", largely as a result of the collapse of borrowing. This is basically a rebalancing and is being achieved by raising prices here rather than lower wages.

It is probably a good thing on some levels.

Wobblydeb

Inflation remains high because the government (via the Bank of England) has deliberately inflated it's way out of debt through quantitative easing.

They have put an extra £325bn into the economy since March 2009.

It is not due to competition from developed nations for basic resources - global demand dropped off as the recession hit.