Inflation

[Iron]

They could, although they might be opening the gates of Hell if they printed money just to avoid having to raise interest rates! That's not to say they wouldn't though!

Jeff

but then the BoE just buys the debt itself (i.e. prints money and debases the currency).

[Iron]

From http://www.bbc.co.uk/news/magazine-14217443:

'Let's say there's 5.5% inflation - not far off the retail price index today - and 2.5% GDP growth, which is about what we hope for. Together that's an 8% change in the amount of money in the economy each year. So divide 72 by eight. The answer is nine. Nine years at those rates of growth and inflation would halve the value of the national debt as a share of national income. Bingo?'

Perhaps that's where Mervyn King is really coming from - maybe he realises our best chance of significantly reducing the national debt isn't through growth, but through inflation...

Jeff

[superfrank]

Bank of England causes inflation, claims former MPC rate-setter Andrew Sentance
http://www.telegraph.co.uk/finance/econ ... tance.html

breaking news: trashing the currency causes inflation!!

"The MPC has no track record of taking tough monetary policy decisions to underpin its credibility," he said, adding that despite its recent forecasting errors "the MPC has redefined it target – putting much more emphasis on its own forecasts... The internal consensus around the Governor has been a very important driving force."

so we're at the mercy of Benny Hill and his abysmal forecasts.

[superfrank]

after yesterday's 'shock' rise in inflation, today's news from the MPC is that inflation "might stay above 3% this year" (which means that it almost certainly will, and that is just the way the BoE really wants it).

Bank of England official warns on UK inflation rate
http://www.bbc.co.uk/news/business-17753235

i wish we could bet on future inflation/growth etc.

[Euler]

Interesting angle on inflation: -

http://www.advisorperspectives.com/news ... conomy.php

[superfrank]

Bank 'might need to miss target'
http://money.uk.msn.com/bank-might-need ... s-target-1

Big hint that the BoE will ignore inflation and carry on printing regardless. that's what they've been doing for years anyway, but interesting that they are preparing the ground for more inflation and yet more depreciation.

prepare for long-term inflation and a run on the pound.

[superfrank]

British Gas to raise its gas and electricity prices
http://www.bbc.co.uk/news/business-19912951

this is the wholesale gas price (futures)...
http://finviz.com/futures_charts.ashx?t=NG&p=w1

prices have been weak in the last few years because of the abundance of new shale gas resources which is very cheap to extract.

while the BoE will welcome inflation (in its bid to erode debt) the problem is that, the more people have to spend on necessities, the less the have to spend on other things thus reducing real disposable incomes further.

[mulberryhawk]

erily quiet on here of late, all the hyperinflationists must be off stocking up on gold guns and ammo

[Iron]

Nothing much to talk about - Uncle Ben is keeping the lions happy by feeding them printed money...

For some reason, you remind me of those wise folk who once regarded the Titanic as an unsinkable ship!

Jeff

erily quiet on here of late, all the hyperinflationists must be off stocking up on gold guns and ammo

[mulberryhawk]

I would have thought the UK inflation rate of 2.2% in line with (actually ) the goveners expectations would have been a big talking point on this thread given some of the "irrational" points of view expressed in the last yr or so

[Iron]

Even a blind squirrel occasionally stumbled across some nuts in the dark.

Tell you what - I'll acknowledge he was right on this occasion if you acknowledge that he usually gets it wrong! *waits for hell to freeze over*

Jeff

I would have thought the UK inflation rate of 2.2% in line with (actually ) the goveners expectations

[mulberryhawk]

People in glass houses and all that comes to mind.....I seem to remember someone saying they wouldent touch treasuries with "a barge pole" which struck me as somewhat odd coming from a trend follower.

It seems you and Merv may have more in common than you think

[Iron]

Do these little barbs really serve any useful purpose?

Jeff

[superfrank]

The central banks are desperately trying to generate inflation but the forces of deleveraging are so strong they struggle to create much despite massive printing as Jeff says.

Treasuries are only defying gravity because the BoE is buying them.

Whatever happened to free markets?

[superfrank]

A racing analogy:

2 horse race: the fav, Bond Yields, is trading at 1.3 and the other horse is called Bond Prices.

however, Bond Yields doesn't like soft ground and it's started raining heavily, and it's gone to post badly, whereas Bond Prices loves softer ground and has gone to post really nicely.

people start laying Bond Yields and backing Bond Prices... but the BoE has a Betfair account into which it can deposit unlimited amounts of funny money. the BoE starts backing Bond Yields with millions preventing a drift and forcing the price (yield) down even more.

Bond Yields then starts playing up at the start...

the problem for the BoE is that, sooner or later, the race is gonna start.