Bank says it has decided to 'accept' high inflation

[petercook7]

Think its time to dump the pound,

The Bank of England has claimed for the first time that it has taken a conscious decision to "accept a temporary period of above-target inflation" – words that analysts queried as an accurate account of the Bank's recent behaviour

Seems like they are going ahead and stealing your productivity to keep bail out those that took more risk than they could handle.

http://www.independent.co.uk/news/bu...n-2286609.html

[jim]

On inflation, Mr Bean said:

Struggling... to... take... seriously...

[Barrichello]

Yep, inflation going to be left alone to let rip. Devalue that monstrous debt baby!

[kalniel]

Exactly. Just about every country in the Euro wishes they had their own currency at the moment

[peterb]

Think its time to dump the pound,

Seems like they are going ahead and stealing your productivity to keep bail out those that took more risk than they could handle.

http://www.independent.co.uk/news/bu...n-2286609.html

I suppose adopting the Dollar would make oil trading easier. Not sure I'd want to become part of the US fiscal system though.

[Hicks12]

so once again "savers" are screwed? .

Better go spend all my money then... woo

[petercook7]

so once again "savers" are screwed? .

Better go spend all my money then... woo

but so are the people that owe money and workers, the only winners are big bankers and MPs.

[kalniel]

but so are the people that owe money

Do you understand what inflation is?

[Hicks12]

The debtors gain from this you see, for example you borrowed £5000 and have to pay it back later on... when you pay it back your hit with inflation and each pound is now worth half (extreme case!) so you still owe 5000 but the debts only worth half in the current market.

Now if you have a saver which has saved up say the same amount £5000, now their money is worth half even though if they had spent that money before hand they would have got a much better price and it would have gone further, hence savers are screwed for being cautious with money!

I think thats right anyway, im not really interested in economics anymore after doing an a-level in it, i forgot it to quickly!

[petercook7]

Do you understand what inflation is?

Yes, i do thank you, when the wage doesnt rise and the level of debt rises you still are hurting via inflation. The only time your debt erodes is when the cost of living isnt high, and your wages increase more than debt, if they don’t happen at the same time you are finished.
Main reason why this country is finished, they can't raise wages and compete on a global scale. Then people have over geared buy up properties, leaving the young unable to buy as wages are out of touch with the cost of living. the government do not want to deflate the property market so we'll end up working more hours for less pay and having FA at the end of the day.
Look at whats going on in Spain right now, it should be going on here but the British are so selfish until the last min when the realise how messed up our countries monetary and political system is.

Our country is so messed that Cameron is siding with mandelson for a future role, the people of this country voted no to AV and they have been fed a bunch of lies and keep on believing it.
The value of your labour is being stolen by inflation, the NHS will be stolen from under your feet but your taxes will still be used to shore up private companies.
Now theres a new market appeared from nowhere that is the student loans market, they are just jacking up the debt on to people, going into other countries destroying them and then ontop of that expecting the British to accept immigration telling us its the human thing to do.
So you are are going to get a stuffing, so the ycan try to reduce government debt, you are going to feel the pain, pay more in taxes and end up renting for teh rest of your natural life, paying of the debt.

[TheAnimus]

Yes, i do thank you, when the wage doesnt rise and the level of debt rises you still are hurting via inflation. The only time your debt erodes is when the cost of living isnt high, and your wages increase more than debt, if they don’t happen at the same time you are finished.
Main reason why this country is finished, they can't raise wages and compete on a global scale. Then people have over geared buy up properties, leaving the young unable to buy as wages are out of touch with the cost of living. the government do not want to deflate the property market so we'll end up working more hours for less pay and having FA at the end of the day.
Look at whats going on in Spain right now, it should be going on here but the British are so selfish until the last min when the realise how messed up our countries monetary and political system is.

Our country is so messed that Cameron is siding with mandelson for a future role, the people of this country voted no to AV and they have been fed a bunch of lies and keep on believing it.
The value of your labour is being stolen by inflation, the NHS will be stolen from under your feet but your taxes will still be used to shore up private companies.
Now theres a new market appeared from nowhere that is the student loans market, they are just jacking up the debt on to people, going into other countries destroying them and then ontop of that expecting the British to accept immigration telling us its the human thing to do.
So you are are going to get a stuffing, so the ycan try to reduce government debt, you are going to feel the pain, pay more in taxes and end up renting for teh rest of your natural life, paying of the debt.

Well **** me, this post is more wrong than a usual petercook7 post.

Inflation, you don't understand what it is.

I just can't be bothered to deceiver it, almost everything is wrong and often directly contradictory....

I mean you say inflation is hitting wages, then say they can't raise wages?!..

Also you claim that we're been selfish by cutting the amount of national debt. Its incredibly selfless to burned future generations isn't it!

Its just this post of yours its.... I lack the words for the kind of chronic ignorance, but better than that, the lack of ability to read your own concepts and arguments. Do you work for the NUS or something?

[peterb]

@petercook7

http://en.wikipedia.org/wiki/Inflation

[petercook7]

Well **** me, this post is more wrong than a usual petercook7 post.

Inflation, you don't understand what it is.

I just can't be bothered to deceiver it, almost everything is wrong and often directly contradictory....

I mean you say inflation is hitting wages, then say they can't raise wages?!..

Also you claim that we're been selfish by cutting the amount of national debt. Its incredibly selfless to burned future generations isn't it!

Its just this post of yours its.... I lack the words for the kind of chronic ignorance, but better than that, the lack of ability to read your own concepts and arguments. Do you work for the NUS or something?

Wages cant rise like before, i dont think you understand the mechanics of inflation and debt.
We arnt cuting the level of debt, we have spend more this year than last year, its the rate thats be cut.
where did i say it was selfless to cut debt? you say its contradictory but you dont have an understand of how it works. inflation does hit wages but we cant raise wages because it'll destroy our economy, (well its already destroyed). The US can never pay its debt, the only way they can pay it back is to default on it, but the holders will not be happy, they are trying to deflate the value of their debt just like this country, yet the side effect will make people poorer, but they must keep wages low or equlibrium with some asian countries.

and i was replying to this

The debtors gain from this you see, for example you borrowed £5000 and have to pay it back later on... when you pay it back your hit with inflation and each pound is now worth half (extreme case!) so you still owe 5000 but the debts only worth half in the current market.

Now if you have a saver which has saved up say the same amount £5000, now their money is worth half even though if they had spent that money before hand they would have got a much better price and it would have gone further, hence savers are screwed for being cautious with money!

the only way inflation erodes debt is if wages are rising and when we have reached the peaking point, otherwise the debt becomes painful.
Example if inflation is 5 % yet your wages are growing at 2-0% does your debt reduce? and at what point does your debt reduce? simple thing to answer.

Inflation is one of the most ingenious tools devised by the state and producer to steal your wealth and productivity

[Lucio]

I'm sorry, but you're nuts petercook7, if you think that inflation is a tool designed to "steal" workers productivity.

To answer your example question, if your goods are inflated @ 5%, and your wages are increasing @ 2%, then your debt only grows once you've run out of money to buy everything, e.g. the cost of your essential goods outstrips your income. Until that point, your debt is decreasing in value, relative to it's purchasing power.

Put it another way, you owe £2,000 to the bank, you have to repay £100 a month in interest, and pay nothing against the capital. You earn £1,000 a month to start with. In 5 years time, you're now earning £1082.43, you're still paying back £100 a month, but it represents a smaller % of your total income (10% vs 9.2%)

Now, inflating the cost of your goods by 5% per annum, means that starting from an "essentials" bill of £400, you end up paying £486.20. Which, means your debt repayments are also decreasing relative to their buying power. Instead of being able to pay for 25% of your monthly essentials, it now represents 20.5%. This means that the debt matters less than it did before inflation occurs.

Overall, in the above scenario, the nett effect is that you're less than half a percent worse off but if you increase the overall debt burdern, the shift moves from a negative, to a positive. The reverse occurs if you increase the amount you spend on your essentials.


The point I'm trying to make here is that economics is not simple, but in broad terms, if you're heavily in debt relative to your essential expenditures, inflation has a positive effect.

[oolon]

Think its time to dump the pound,

Some of us did that a while ago, everyone thinks houses are a bad investment at the moment, however what ever happens you still have a house. Not the same with money, it can lose its value.

[Spud1]

I do love to read your posts petercook7, always entertaining

It's a good time to buy some national saving certificates now if you are worried about inflation eroding your savings - assuming that inflation remains high for at least the next 12 months (minimum period for you to see any benefit from them), they are a better tax free investment than any ISA - the only issue is how much to buy, and if you transfer any money out of an ISA (therefore losing your allowance there) to do so.

Assuming that they are still available to purchase in the next 2 months that is what I will be doing with my bonus I think!