Reply to: Inflation measure turns negative

[Pickle2]

CPI still WELL above target.

Ssshhhhhhhhh

[HairyArsedBloke]

CPI still WELL above target.

[Pickle2]

UK inflation slows more in April

UK inflation slows more in April

UK annual inflation has dropped in April as the recession continued to push down demand from consumers.

..the Retail Prices Index (RPI), fell further to -1.2% from -0.4% in March, which was the first negative reading since 1960.

http://news.bbc.co.uk/1/hi/business/8057032.stm

[Pickle2]

Sorry, but after claiming that "inflation is the increase of the supply of money and credit", I think any posts from you on the subject are probably best ignored....

To be fair, its not me who claims that, its a widely held definition,the austrian school first defined it thus many it years ago.


http://www.minyanville.com/articles/.../index/a/13019

This finding is consistent with scholarly observations, particularly in writings from the Austrian school, which recognize the original meaning of inflation as related to the notion of an increase in the supply of money and credit (e.g., Mises, 1949; Rothbard, 1962).

..


The more fundamental issue concerns the appropriateness of a price-based definition of inflation in the first place. A rise in prices is an outcome that can be activated by three causal factors: a decrease in the supply of goods on the market, a collective social movement towards less saving and more spending, or an increase in the supply of money and credit (Rothbard, 1962). A price-based measure of inflation is an outcomes measure; it provides no information about the factors that influence price behavior.

[PM-Junkie]

Another headshot for your Inflationary fantasies.

UK wages collapse at fastest rate in 60 years

Weekly wages fell at the fastest rate in 60 years in February as City bonuses were slashed and workers agreed to reduced hours in the wake of recession, the latest official figures show. ... We certainly haven't seen anything like this in the last 60 years - and probably not in peacetime since the 1930s.


http://www.telegraph.co.uk/finance/e...-60-years.html

Sorry, but after claiming that "inflation is the increase of the supply of money and credit", I think any posts from you on the subject are probably best ignored....

[Pickle2]

Inflationary effects do not necessarily happen immediately as stocks held in the uk are not immediately replenished and also stocks already held in the uk will be sold at the 'old' price. Thus it can take a few months for the full effects to be seen.

Another headshot for your Inflationary fantasies.

UK wages collapse at fastest rate in 60 years

Weekly wages fell at the fastest rate in 60 years in February as City bonuses were slashed and workers agreed to reduced hours in the wake of recession, the latest official figures show. ... We certainly haven't seen anything like this in the last 60 years - and probably not in peacetime since the 1930s.


http://www.telegraph.co.uk/finance/e...-60-years.html

[Cyberman]

The fall in the pound has happend. The pound is up 10% against the euro since xmas. Any inflationary effects are allready cooked in - and yet we still have negative RPI.

Inflationary effects do not necessarily happen immediately as stocks held in the uk are not immediately replenished and also stocks already held in the uk will be sold at the 'old' price. Thus it can take a few months for the full effects to be seen.

[PM-Junkie]

Nowhere near as fast as the supply of credit is being destroyed. Inflation is the increase of the supply of money and credit. If money goes up by x, but credit goes down by x + 1, we have deflation.

Creating inflation is the aim of QE. It failed in Japan. It will fail in the US and UK too.

Why all the belief in the Brown's government ability to manage the economy all of a sudden?

Nonsense. QE is a tool that is used to relieve pressure on banks and get them lending again. Creating inflation is not the aim of QE, it is one of the side effects of QE.

And inflation is the measure of the increase of the price of an agreed set of goods. If inflation is simply a measure of the increase of the supply of money and credit, perhaps you can explain why inflation rises when the supply of goods doesn't meet demand, and the supply of money remains constant?

[AtW]

Why is it called negative inflation instead of deflation ?

Because in most contracts that contain reference to pay increases they mention "inflation"...

[Andy2]

Why is it called negative inflation instead of deflation ?

[BrilloPad]

42'' LCD TVs apparently dropped in price compared to last year.

HTH

What about pot noodles?

[AtW]

yet we still have negative RPI.

42'' LCD TVs apparently dropped in price compared to last year.

HTH

[BrilloPad]

Nowhere near as fast as the supply of credit is being destroyed. Inflation is the increase of the supply of money and credit. If money goes up by x, but credit goes down by x + 1, we have deflation.

Creating inflation is the aim of QE. It failed in Japan. It will fail in the US and UK too.

Why all the belief in the Brown's government ability to manage the economy all of a sudden?

I agree. Issue currently is that people are borrowing too much. We have to learn to live within our means : both as individuals and as a country.

[Pickle2]

... and the fall in the pound will also cause inflation on imported goods !!

The fall in the pound has happend. The pound is up 10% against the euro since xmas. Any inflationary effects are allready cooked in - and yet we still have negative RPI.

[Pickle2]

Umm, the money supply is being increased through QE.

Nowhere near as fast as the supply of credit is being destroyed. Inflation is the increase of the supply of money and credit. If money goes up by x, but credit goes down by x + 1, we have deflation.

Creating inflation is the aim of QE. It failed in Japan. It will fail in the US and UK too.

Why all the belief in the Brown's government ability to manage the economy all of a sudden?