tag:blogger.com,1999:blog-32841798.post7375344563436892259..comments2024-03-28T09:55:42.123+00:00Comments on Capitalists@Work: Inflation is here to stay in the UK; is it time to find an alternative solution?CityUnslickerhttp://www.blogger.com/profile/15929544047783163175noreply@blogger.comBlogger6125tag:blogger.com,1999:blog-32841798.post-26103935022550922962011-06-02T14:13:03.869+01:002011-06-02T14:13:03.869+01:00Don't worry, we are on the verge of WW 3, that...Don't worry, we are on the verge of WW 3, that should reduce the human population by a couple of billion. Wars always happen when commodity prices head up, you are familiar with the war cycle aren't you? Marc Faber had a good section on it in his book, 'Tomorrow"s Gold'. Not the most cheery read, but as Gandalf said, 'nobody would choose to live in these times, but these are the times that we live in".Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-32841798.post-15726540659669532342011-06-02T14:00:13.774+01:002011-06-02T14:00:13.774+01:00The TBFPII(Timbo's Beer Fags & Petrol Infl...The TBFPII(Timbo's Beer Fags & Petrol Inflation Index) - newly calculated :)<br /><br />According to this index inflation for the last 40 years is running at an average compound 9% (just below for the "P" element) <br />Elements:<br /><br /> 1971 -----> 2011<br /><br />Fags 4s/11d -> £7.10<br />Beer 1s/10d -> £3.30<br />Petrol 1s/3d(ltr)-> £1.35 <br /><br />("New Money" and Imperial conversions left as an exercise for the reader)<br />I've calculated a couple of others. Such as Housing: <br /><br />My first house was a 2 Up 2 down Terrace House. Cost in 1972 - £6000.00<br />Apply 9% Compound for 40 years and you get Ta Da! £188,456.00 Which is probably just below what you would pay for said house in Sunny Central Surrey today.<br /><br />Breakfast (in a greasy spoon café) 1971 = 1s/6d compound at 9% = £2.35 Try finding breakfast (including tea) for that!<br /><br />I know someone is going to say that some things (material manufactured things) have reduced dramatically relative to the 1970s But we don't have to buy those things where as we do need breakfast, petrol, houses and most definitely beer.<br /> <br />Conclusion:<br /><br />The government figures ranging from -x to +x for annual inflation are bollox! If you want to know what things are going to cost in retirement - compound today's price by 9%<br /> <br />We all know that inflation is used to make the government's (and our own) debts disappear quicker. More inflation = more tax income. But how is this supposed to happen when the wages to be taxed are actually <i>decreasing</i>? To pay the debt using inflated taxation we need wage increases to be around 9% PA not -3%!<br /><br />Conclusion 2: We are 12% adrift of the debt payback by inflation scheme (I don't see UK manufacturing and export paying for it)!Timbo614https://www.blogger.com/profile/14671168026195402267noreply@blogger.comtag:blogger.com,1999:blog-32841798.post-26570088218885195302011-06-02T13:54:11.942+01:002011-06-02T13:54:11.942+01:00Hmm, I don't think the thought experiment is a...Hmm, I don't think the thought experiment is as hard as you suggest. If the BoE had only dropped rates to - say - 3% would the economy have grown more or less since the crash? I would guess rather less. Likewise the government is doing the absolute minimum in order to preserve low interest rates. We are still in a deflation/deleveraging phase so if the government slashed spending and cut taxes there is a good chance the private sector simply would not replace all that lost demand. <br /><br />I can't get worked up about 5% inflation, I really can't. I am just about old enough to remember double-digit inflation and how miserable people were in the early 1990s. This recession has been nowhere near as bad.Old BEhttps://www.blogger.com/profile/06974090439936326476noreply@blogger.comtag:blogger.com,1999:blog-32841798.post-80682071202913250032011-06-02T13:33:01.798+01:002011-06-02T13:33:01.798+01:00BE - as ever, who knows with hindsight. Certainly ...BE - as ever, who knows with hindsight. Certainly the current Govt is going wrong with tax hikes and no spending cuts. the real issue is the massive bank bailout - that is what sytmies normal economic activity and will continue to do so over the course of this parliament.<br /><br />Andrew - One for my holiday reading list i think, ta.CityUnslickerhttps://www.blogger.com/profile/15929544047783163175noreply@blogger.comtag:blogger.com,1999:blog-32841798.post-58322111197484806152011-06-02T12:38:20.367+01:002011-06-02T12:38:20.367+01:00I read 'When money dies' by Adam Fergusson...I read 'When money dies' by Adam Fergusson and recommend it to all.<br /><br />There is a section devoted to the Austrians.<br /><br />Basically between 1919 and 1923 they lost their empire, their currency, there was mass unemployment, the whole of the middle class was impoverished, mass shortages of food, social unrest, and the government was effectively handed over to foreigners (the league of nations) and at one point the chancellor was seeking a merger with Italy, Germany or France. <br /><br />Even though this was some 90 years ago, I can understand the Austrians collective horror of monetary instability.andrewhttps://www.blogger.com/profile/07311993288675111834noreply@blogger.comtag:blogger.com,1999:blog-32841798.post-71542979896827270002011-06-02T10:51:14.333+01:002011-06-02T10:51:14.333+01:00The way to be able to afford to buy more of the in...The way to be able to afford to buy more of the internationally-traded bits and pieces like food, oil and iPads is to earn more. Would a different monetary policy over the last couple of years would have made Britain richer than it is today?Old BEhttps://www.blogger.com/profile/06974090439936326476noreply@blogger.com