Mervyn King...... useless?

[nickmac209]

What are your views very clever or completely useless?..... http://www.nytimes.com/2011/02/07/business/07king....

[brickwall]

nickmac209 said:

.....very clever or completely useless?

A slight false dichotomy. The two are far from mutually exclusive.

[JagLover]

Misguided

IMO he is making the same mistake Greenspan made (which brought us to the current situation) of keeping interest rates too low after the crises. Measured 1/4 point rises in base rates would have sent a strong anti-inflation signal while still not hitting borrowers much (many of whom are borrowing at rates far removed from BOE base rates)

[johnfm]

is the real world inflation being felt in food and fuel prices a result of money supply? Or resource scarcity?

[fido]

Yes.

[Fittster]

Completely incompetent.

[Murcielago_Boy]

johnfm said:

is the real world inflation being felt in food and fuel prices a result of money supply? Or resource scarcity?

THAT is the key question.

[Fittster]

Murcielago_Boy said:

THAT is the key question.

Over the last 2 years has the amount of cooper used exploded and the global population increased to explain the rise in food prices? The factor that has changed is the amount of hot money created by central banks.

[SplatSpeed]

This is the communist view of him in America.

Because they are considering QE and he isn't.

[loafer123]

johnfm said:

is the real world inflation being felt in food and fuel prices a result of money supply? Or resource scarcity?

Resource scarcity.

Raising interest rates would be pointless.

Better to keep the pound low, discourage imports and encourage exports.

[johnfm]

Fittster said:

Over the last 2 years has the amount of cooper used exploded and the global population increased to explain the rise in food prices? The factor that has changed is the amount of hot money created by central banks.

No, but there has been a number of crop failures in Russia, Australia, Africa etc. So, which demand hasn't increased, supply has been compromised.

Frankly, I find the only thing I buy that has increased in price is fuel. Everything else seems no more expensive if you take advantage of sales, reductions, offers etc.

[JagLover]

loafer123 said:

Resource scarcity.

Raising interest rates would be pointless.

Not at all, for one thing it would help savers obtain a more decent return on their money.

[johnfm]

You assume banks would increase their saver rates in line with BoE base rate change....

[IainT]

JagLover said:

loafer123 said:

Resource scarcity.

Raising interest rates would be pointless.

Not at all, for one thing it would help savers obtain a more decent return on their money.

For every winner on that front there would be a loser on borrowing so it's not a win-win.

If, as most seem to think, inflation is being driven not by demand but by supply then raising the rates would not have any positive effect.

[ZondaMark]

johnfm said:

No, but there has been a number of crop failures in Russia, Australia, Africa etc. So, which demand hasn't increased, supply has been compromised.

Frankly, I find the only thing I buy that has increased in price is fuel. Everything else seems no more expensive if you take advantage of sales, reductions, offers etc.

Jim O'Neill broke down the numbers in the Telegraph the other week, and reckoned there's $600-800bn worth of consumption being added to global demand by the BRICs annually.

[johnfm]

ZondaMark said:

Jim O'Neill broke down the numbers in the Telegraph the other week, and reckoned there's $600-800bn worth of consumption being added to global demand by the BRICs annually.

That would make sense - especially as these up and comers discover the joys of meat over rice based diets.

[XJ40]

I think his decision to keep interest rates low is the correct one, especially in light of the Q4 GDP figures. Let's get some growth on the go before fretting too much about inflation (which I don't reckon is being caused by raging demand and excessive money anyway).