Inflation at 5% soon - Mervyn King

[Mermaid]

http://www.youtube.com/watch?v=WvD6uhdGKc4

So 5% inflation, interest rates at virtually zero, savers being punished, living standards down as the responsible pay the price.

[singlecoil]

Mermaid said:

http://www.youtube.com/watch?v=WvD6uhdGKc4

So 5% inflation, interest rates at virtually zero, savers being punished,

Is it your feeling that that is a deliberate policy (not the actual 'punishing') but as a way of reducing the spending power of people who are sitting on piles of paper money?

[Beardy10]

singlecoil said:

Mermaid said:

http://www.youtube.com/watch?v=WvD6uhdGKc4

So 5% inflation, interest rates at virtually zero, savers being punished,

Is it your feeling that that is a deliberate policy (not the actual 'punishing') but as a way of reducing the spending power of people who are sitting on piles of paper money?

It's a deliberate policy to inflate away the debt burden of HM Govt. Surely that's pretty obvious and standard economic practice....that's why the politicians aren't getting more feisty about it. They're quite happy to see it and it will come down next year (whilst still being high) as the VAT rise will be in the system by then.

[Mermaid]

Beardy10 said:

It's a deliberate policy to inflate away the debt burden of HM Govt. Surely that's pretty obvious and standard economic practice....

& also the life savings of responsible people - how long before they riot

[wolves_wanderer]

You mean it's not already?!

[thinfourth2]

wolves_wanderer said:

You mean it's not already?!

its only that low if you eat DVD players and power your car with smart phones

For those of us that eat food and use petrol to get around its way higher then 5%

[Mermaid]

thinfourth2 said:

For those of us that eat food and use petrol to get around its way higher then 5%

Lower living standards for a few more years

[Wadeski]

If you're saving in cash, relying on interest rates...wtf are you doing?

[Mermaid]

The Government wants you to spend it, and have no savings.

[Scooby72]

thinfourth2 said:

its only that low if you eat DVD players and power your car with smart phones

For those of us that eat food and use petrol to get around its way higher then 5%

Very well put !!

Every day you hear of this and that going up by 10, 15, 20 %

Just not the stuff in the governments measure of inflation.

When property starts falling properly, they will probably put that back into the mix.

[Scooby72]

Mermaid said:

Lower living standards for a few more years

I don't think it will be just for a few more years.

We've had our ups and downs for decades now, but this time I reckon it will be a gradual but continuous decline of all the Western economies, until we are at the level of where the East was a few years ago, and they get up to where we are now. I just can't see anything on the horizon that is going to turn this trend around.

[Mermaid]

Chancellor Osborne is expected to make a statement on growth today. With the MPC signalling that Bank Rate will remain at 0.5% at least until Q3 2012 in their quarterly Inflation Report yesterday, the Chancellor could give hints about additional fiscal stimulus measures that could be used if needed.

For now it seems that the Coalition government favours temporary tax cuts rather than spending measures and there has been pressure on them to reverse January’s VAT rise.

There are some who are pressing for the 50p tax rate to be reduced to 45p in order to show that the UK is ‘open for business’ but this measure appears to be opposed by the Liberal Democrats who would only pass it if a ‘Mansion Tax’ on properties worth over £2 million was also imposed.

[singlecoil]

Scooby72 said:

Mermaid said:

Lower living standards for a few more years

I don't think it will be just for a few more years.

We've had our ups and downs for decades now, but this time I reckon it will be a gradual but continuous decline of all the Western economies, until we are at the level of where the East was a few years ago, and they get up to where we are now. I just can't see anything on the horizon that is going to turn this trend around.

I agree. There are simply too many people who want a better standard of living and are now able to get it, the UK standard is much higher than worldwide averages and now that everything has been globalised our standard is going to be reduced (forever) as the standards of others is increased.

[youngsyr]

singlecoil said:

Scooby72 said:

Mermaid said:

Lower living standards for a few more years

I don't think it will be just for a few more years.

We've had our ups and downs for decades now, but this time I reckon it will be a gradual but continuous decline of all the Western economies, until we are at the level of where the East was a few years ago, and they get up to where we are now. I just can't see anything on the horizon that is going to turn this trend around.

I agree. There are simply too many people who want a better standard of living and are now able to get it, the UK standard is much higher than worldwide averages and now that everything has been globalised our standard is going to be reduced (forever) as the standards of others is increased.

Living standards aren't a zero sum game.

It's possible for everyone's living standards to increase at the same time.

For instance, if the overall Chinese living standards improve significantly (and it's by no means guaranteed), it's quite possible that they will demand more UK goods and services, increasing our GDP along with their wealth.

[herewego]

Mermaid said:

The Government wants you to spend it, and have no savings.

However they also want you to save it for your old age.

[Beardy10]

Mermaid said:

Beardy10 said:

It's a deliberate policy to inflate away the debt burden of HM Govt. Surely that's pretty obvious and standard economic practice....

& also the life savings of responsible people - how long before they riot

Well exactly but that's why it's not talked about.

It's not really a surprise when people with little or no disposable income are seeing their wages decrease by 5% in real terms....you'd actually be surprised if something like we have seen in the last few days didn't happen looking at history.

[Mermaid]

Beardy10 said:

Well exactly but that's why it's not talked about.

It's not really a surprise when people with little or no disposable income are seeing their wages decrease by 5% in real terms....you'd actually be surprised if something like we have seen in the last few days didn't happen looking at history.

Osborne says recovery will take a lot longer - cuts make the UK a safe haven

[Ozzie Osmond]

Mermaid said:

So 5% inflation, interest rates at virtually zero, savers being punished, living standards down as the responsible pay the price.

And on this basis, given the indexation allowance and taper relief have been withdrawn, Capital Gains Tax (CGT) becomes a overarching "Wealth Tax" of 1.5% a year. (i.e. 28% of 5%)

Nice.

[Traveller]

If Meryn King had a normal annual performance appraisal, he would now be at jobcentre plus. An interesting fact is the treasury pension has been changed to protect against inflation since 2009, even when he was warning the country about the impending dangers of imaginary deflation. You are a little more circumspect with your own money eh Merv.

[Beardy10]

Mermaid said:

Beardy10 said:

Well exactly but that's why it's not talked about.

It's not really a surprise when people with little or no disposable income are seeing their wages decrease by 5% in real terms....you'd actually be surprised if something like we have seen in the last few days didn't happen looking at history.

Osborne says recovery will take a lot longer - cuts make the UK a safe haven

Well indeed but they knew that at the outset anyway....."expectation management" I think it's called.

If you remember when Obama was hear there was a little bit of tension around the different approaches to recovery in the US and UK...investment vs austerity to simplify it. Whatever else you say about Cameron the economic policies are market friendly which is no bad thing in these times.....