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Bad news for savers
talexuser
Posts: 3,538 Forumite
We already have had the BOE target changed from RPI to CPI, thus reducing the target conveniently. Now we seem to be softening up for the next step.
BBC News
"Mark Carney, the Canadian central bank head who is due to take over from Sir Mervyn as governor from June, has hinted at the possibility of scrapping inflation targeting.
Nominal Gross Domestic Product measures the economy's total economic output, but without adjusting for rising prices.
Targeting NGDP instead of CPI inflation would enable the Bank to tolerate higher inflation during the current period of depressed economic growth, and would also oblige the Bank to seek an even faster rise in prices if it had fallen short of its target in previous months.
Some economists think that the resulting bias towards higher inflation - at least while the economy remains depressed - would help to make debts more manageable by eroding their value, and would encourage people to spend more for fear that their savings would also be eroded by rising prices."
end quote.
Could it be any clearer that inflation which we have been told for 40 years is the worst thing that could happen to a country's prosperity is now a policy to reduce the debt? In periods of high inflation where income falls behind prices do people really rush out to the shops and buy stuff that is not food/mortgage/rent/heating etc essentials?
BBC News
"Mark Carney, the Canadian central bank head who is due to take over from Sir Mervyn as governor from June, has hinted at the possibility of scrapping inflation targeting.
Nominal Gross Domestic Product measures the economy's total economic output, but without adjusting for rising prices.
Targeting NGDP instead of CPI inflation would enable the Bank to tolerate higher inflation during the current period of depressed economic growth, and would also oblige the Bank to seek an even faster rise in prices if it had fallen short of its target in previous months.
Some economists think that the resulting bias towards higher inflation - at least while the economy remains depressed - would help to make debts more manageable by eroding their value, and would encourage people to spend more for fear that their savings would also be eroded by rising prices."
end quote.
Could it be any clearer that inflation which we have been told for 40 years is the worst thing that could happen to a country's prosperity is now a policy to reduce the debt? In periods of high inflation where income falls behind prices do people really rush out to the shops and buy stuff that is not food/mortgage/rent/heating etc essentials?
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Comments
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sounds like he's trying to state the real bank/government policy a little more openly.
it's a rather odd idea that higher inflation counts as an acceptable substitute for higher growth.
but what do you expect from somebody who used to work for goldman sachs?0 -
I just finished reading an rather interesting article on this very subject.
http://www.bondvigilantes.com/blog/2012/12/13/central-bank-regime-change-an-update-following-the-fed-last-night-and-carney-the-day-before/I am not a financial adviser and neither do I play one on television. I might occasionally give bad advice but at least it's free.
Like all religions, the Faith of the Invisible Pink Unicorns is based upon both logic and faith. We have faith that they are pink; we logically know that they are invisible because we can't see them.0 -
Great article. The thing that gets me is that if the growth figure is not adjusted for rising prices, then it itself is a kind of con where you count high inflation as part of growth?0
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That link doesn't work for me.I am not a financial adviser and neither do I play one on television. I might occasionally give bad advice but at least it's free.
Like all religions, the Faith of the Invisible Pink Unicorns is based upon both logic and faith. We have faith that they are pink; we logically know that they are invisible because we can't see them.0 -
Works for me, I'm reading the pdf now. The link is to a download.'We don't need to be smarter than the rest; we need to be more disciplined than the rest.' - WB0
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gadgetmind wrote: »That link doesn't work for me.
Yes, there is a greyed-out "download" button in the middle which asks you to put in the code on the page (to prove you are not a bot) and then downloads the PDF. No registration necessary!
J0 -
Ah, it wanted me to enable javascript, which I did with deep reluctance.
I've skimmed the document but found it a tinge "green ink" for my liking.I am not a financial adviser and neither do I play one on television. I might occasionally give bad advice but at least it's free.
Like all religions, the Faith of the Invisible Pink Unicorns is based upon both logic and faith. We have faith that they are pink; we logically know that they are invisible because we can't see them.0 -
gadget, what does "green ink" mean?
J0 -
I am not a financial adviser and neither do I play one on television. I might occasionally give bad advice but at least it's free.
Like all religions, the Faith of the Invisible Pink Unicorns is based upon both logic and faith. We have faith that they are pink; we logically know that they are invisible because we can't see them.0
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