How high will inflation go???
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jesusbuiltmycar

Original Poster:

5,131 posts

284 months

Wednesday 16th December 2009
quotequote all
As we all know the printing presses at the Bank of England have been working flat out, quantitively easing an extra £200,000,000,000 into the economy to fight the "spectre of deflation".

Yesterday's figures showed that inflation for the last quater is running at 1.9% - far higher than most of teh so called experts predicted.

VAT goes back to 17.5% at the end of the year this will have the effect of increasing inflation (2.5% extra for most products).

This Spectator shows that during the recession we have had the highest inflation (least deflation) of all G7 nations and we are the only G20 nation still in recession.

So how high will inflation go?

Will it inflate away the nations debts and what effect will it have on personal debts (e.g. mortgages)?

see also:
guido-fawkes

Will we see double digit inflation within the next 18-24months?

eta extra ,000


Edited by jesusbuiltmycar on Wednesday 16th December 11:22

NoelWatson

11,710 posts

272 months

Wednesday 16th December 2009
quotequote all
jesusbuiltmycar said:
Will it inflate away the nations debts
Surely to inflate away one's debts, one needs to get a payrise? Oh dear.

Mclovin

1,679 posts

228 months

Wednesday 16th December 2009
quotequote all
in all likely hood political spin but i was reading in one of the papers that a lot of people are scrambling to pay down their debts and mortgages which is causing a deflationary pressure...

RichardD

3,608 posts

275 months

Wednesday 16th December 2009
quotequote all
jesusbuiltmycar said:
As we all know the printing presses at the Bank of England have been working flat out, quantitively easing an extra £200,000,000 into the economy to fight the "spectre of deflation".
...
Isn't that QE figure missing some zeros, ie another ,000 at the end !?

BigJonMcQuimm

975 posts

242 months

Wednesday 16th December 2009
quotequote all
Double digit easy..

As the pound continues to devalue we will get higher and higher inflation.

As a net importer that is the only outcome.

Will the BOE really stop the presses at 200 bill? Nope..not im my opinion.

The second wave will really hurt as interest rates soar and home repos go up etc etc.

2010 will be very bad 2011 will be even worse.






Mclovin

1,679 posts

228 months

Wednesday 16th December 2009
quotequote all
anyway most the experts are saying deflation followed by a load of inflation....

strudel

5,889 posts

257 months

Wednesday 16th December 2009
quotequote all
Whats the effect on house prices - presumably a huge crash as no one can get a mortgage? Was thinking of selling up and renting...

XJR40

5,987 posts

243 months

Wednesday 16th December 2009
quotequote all
If we do get high inflation, will it force up asset prices, namely houses?

Tangent Police

3,097 posts

206 months

Wednesday 16th December 2009
quotequote all
I suppose it depends how hard they try to contain inflation.

Obviously putting interest rates up will hurt precious voters (via mortgage defaults). The resulting house price crash will irritate the paid up "my house is still worth £700k" brigade. Not putting them up will solve a lot of debt problems, as well as irritating those who lent the money.

It will nail anyone who hasn't been savvy enough to get their money out of savings and into "stuff". ie:- your old people, but who gives a fk about them anyway?

DO they really really really need to contain inflation?

Not as much as they should, is the answer, I expect for similar political reasons.

CMD has not demonstrated the ability to be a balls out leader. I don't think he will grab the bull by the horns, so probably something very slight, compromised and subtle will "emerge" like a turtles head.

House prices must be held up and mortgages must be repayable. That's how you get votes and it doesn't matter if everything else goes to st. They've only got to hang on until further federalisation allows them to step onto the security of the EUSSR Politate

Edited by Tangent Police on Wednesday 16th December 13:12

rfisher

5,064 posts

313 months

Wednesday 16th December 2009
quotequote all
Two points;

1. If CMD is the next PM he's very likely to have a trivial majority which will essentially castrate him.

2. He's going to need massive cohonis (sp) to get through the next 5 years even with a hugh majority.

I'm not convinced he's a Thatcher or Churchill.

I'd love to be proved wrong - we really really really are going to need someone who can wrestle bulls for breakfast if we're to stand a chance of surviving this mess.

If he turns out to be a wet Obama dreamer then we're fecked.

Tangent Police

3,097 posts

206 months

Wednesday 16th December 2009
quotequote all
rfisher said:
Two points;

1. If CMD is the next PM he's very likely to have a trivial majority which will essentially castrate him.

2. He's going to need massive cohonis (sp) to get through the next 5 years even with a hugh majority.

I'm not convinced he's a Thatcher or Churchill.

I'd love to be proved wrong - we really really really are going to need someone who can wrestle bulls for breakfast if we're to stand a chance of surviving this mess.

If he turns out to be a wet Obama dreamer then we're fecked.
Hague is worth 4 CMD's and Thatcher is worth about 4 Hagues.

It's not going to happen folks.

I'd just get rid of your cash into something else!

Fittster

20,120 posts

243 months

Wednesday 16th December 2009
quotequote all
rfisher said:
I'm not convinced he's a Churchill.
Well that's a good start, not a war mongering fool who in his spare time enjoys creating a large welfare state.

Everyone seems in a hurry to discount the chances of a Japanese style slump last decades. Creating inflation can be a lot more difficult than people think.

fido

18,915 posts

285 months

Wednesday 16th December 2009
quotequote all
strudel said:
Whats the effect on house prices - presumably a huge crash as no one can get a mortgage? Was thinking of selling up and renting...
You're 2 and a bit years too late, assuming you had the foresight to move your £s into something else less easy to quantitate.

Edited by fido on Wednesday 16th December 13:25

RichardD

3,608 posts

275 months

Wednesday 16th December 2009
quotequote all
Fittster said:
...Everyone seems in a hurry to discount the chances of a Japanese style slump last decades. Creating inflation can be a lot more difficult than people think.
What do you think would be the consequence of the gubbermunt printing another £200b of Q.E. funny money every year for say the next three years!?

I ask as a related question (hoping the Tangent Police don't get me hehe), not implying that it is a gauranteed inflation generating mechanism although it seems as though it should be!

Fittster

20,120 posts

243 months

Wednesday 16th December 2009
quotequote all
RichardD said:
Fittster said:
...Everyone seems in a hurry to discount the chances of a Japanese style slump last decades. Creating inflation can be a lot more difficult than people think.
What do you think would be the consequence of the gubbermunt printing another £200b of Q.E. funny money every year for say the next three years!?

I ask as a related question (hoping the Tangent Police don't get me hehe), not implying that it is a gauranteed inflation generating mechanism although it seems as though it should be!
I don't know what will happen in the future, but there are aguments that Q.E. won't lead to inflation:

Lessons from Japan: why quantitative easing won't lead to inflation

"The Quantity Theory of Money states that money supply (M) times the velocity (V) at which money flows around the system, equals prices (P) times economic activity or transactions (T)".

Without the velocity there isn't inflation.

strudel

5,889 posts

257 months

Wednesday 16th December 2009
quotequote all
fido said:
strudel said:
Whats the effect on house prices - presumably a huge crash as no one can get a mortgage? Was thinking of selling up and renting...
You're 2 and a bit years too late, assuming you had the foresight to move your £s into something else less easy to quantitate.
I'd hardly say we've had a crash yet. I think the retiurn of 15% mortgages might push them down a little further! But as I was nipper last time I'd like a better idea of what I'm in for.

BigJonMcQuimm

975 posts

242 months

Wednesday 16th December 2009
quotequote all
Fittster said:
rfisher said:
I'm not convinced he's a Churchill.
Well that's a good start, not a war mongering fool who in his spare time enjoys creating a large welfare state.

Everyone seems in a hurry to discount the chances of a Japanese style slump last decades. Creating inflation can be a lot more difficult than people think.
Amen to that!

Tangent Police

3,097 posts

206 months

Wednesday 16th December 2009
quotequote all
BigJonMcQuimm said:
Fittster said:
rfisher said:
I'm not convinced he's a Churchill.
Well that's a good start, not a war mongering fool who in his spare time enjoys creating a large welfare state.

Everyone seems in a hurry to discount the chances of a Japanese style slump last decades. Creating inflation can be a lot more difficult than people think.
Amen to that!
Are you not confusing growth and inflation?


(sorry to come across as obtuse)

Mclovin

1,679 posts

228 months

Wednesday 16th December 2009
quotequote all
jesus you guys are acting like true sheeples, qe was a drop in the ocean....

check this out for some expert predictions-

http://commoditywatch.podbean.com/2009/12/15/predi...

fido

18,915 posts

285 months

Wednesday 16th December 2009
quotequote all
Fittster said:
"The Quantity Theory of Money states that money supply (M) times the velocity (V) at which money flows around the system, equals prices (P) times economic activity or transactions (T)".
Not saying it couldn't happen in the UK, but we don't appear to have nearly the same level of asset deflation (contributing to the 'M' in the Money equation above) that Japan experienced in the 90s (some areas of Tokyo slumped to 1% of their peak!) .. looking at FindAProperty we are experiencing the opposite, in London at least.