Reply to: UK inflation posts unexpected rise in March

[OwlHoot]

I am still trying work out what the downside of inflation is. Unless you are a saver it is not clear. To me anyway.

If we're talking about deliberate inflation, contrived to stimulate the economy, I suppose one downside is that it tends to stay around and worsen once it has done its job.

A bit like lighting a fire to stay warm in a woodchip warehouse, or like Romano-Britons hiring Saxon mercenaries to fight each other in the 400s - Before they knew it the Saxons were taking over.

[BigTime]

I bet it don't stop them printing money.

Aye. We've pulled the avoiding deflation one too many times and it's obvious we need to keep printing to survive so let's crack on.

[BrilloPad]

See the news tonight?

Looks like BoE finally moved on from just a blip to expect inflation to remain high.

I bet it don't stop them printing money.

[BigTime]

See the news tonight?

Looks like BoE finally moved on from just a blip to expect inflation to remain high.

[BrilloPad]

I don't understand how banks are making money on 1.5% interest mortgages when inflation is 10%, or whatever the real non-ipod-fiddled inflation rate is.

Aren't they borrowing the money from the BoE at 0.5%?

[Gonzo]

Badly, but that's not because they are idiots - they are very smart people who know exactly what they do but they've used all their experience and authority to keep rates down and print money whilst completely disregarding their main objective - keep inflation within the range.

Their public main objective. Their real objective was different I think.

Still, it was good while it lasted.

[Old Greg]

Why can't they just admit that the real inflation target is as high as possible to inflate the debt away?

Quite right too.

[TimberWolf]

I don't understand how banks are making money on 1.5% interest mortgages when inflation is 10%, or whatever the real non-ipod-fiddled inflation rate is.

[BrilloPad]

Article in Telegraph here Why you can't inflate away the eurozone's troubles – Telegraph Blogs

But it is totally false. What caused WW2 was not deflation. It was Versailles treaty and the USA calling in loans following the wall street crash ( Weimar Republic and the Great Depression ).

I am still trying work out what the downside of inflation is. Unless you are a saver it is not clear. To me anyway.

[TimberWolf]

Aren't they getting away with it because they don't have to worry to much about annoying creditors, because these are either savers, pensioners, future generations or the government itself courtesy of the printing press.

[BrilloPad]

Public sector and pensions would require more money to compensate for real inflation ...

Which can be printed. The big losers from inflation are savers.

[OwlHoot]

Interesting that the Beeb chose to air a program on the '70s this week.

Are we being softened up for an anticipated rerun of the inflation / industrial unrest cycle of those days?

[AtW]

Why can't they just admit that the real inflation target is as high as possible to inflate the debt away?

Public sector and pensions would require more money to compensate for real inflation ...

[BrilloPad]

Why can't they just admit that the real inflation target is as high as possible to inflate the debt away?

[centurian]

Badly, but that's not because they are idiots - they are very smart people who know exactly what they do but they've used all their experience and authority to keep rates down and print money whilst completely disregarding their main objective - keep inflation within the range.

WAtWS

He knew exactly what would happen - just wasn't prepared to admit it

It's easier to seek forgiveness than permission...