Screwing Savers

So the Deputy Governor of the Bank of England thinks savers should stop moaning and start spending. He says:

"Savers shouldn't necessarily expect to be able to live just off their income in times when interest rates are low. It may make sense for them to eat into their capital a bit... Very often older households have actually benefited from the fact that they've seen capital gains on their houses."

So now we know. Savers should not expect the Bank of England to protect them against the ravages of inflationary finance. The Bank's official advice is to spend your savings pdq before they disappear.

According to the Bank of England's own stats, the average interest rate on High Street savings accounts is a derisory 0.23% pa. Yet inflation is currently running at 3.1% on the CPI measure and an eye-watering 4.7% on the RPI measure. So after taking account of inflation, the real rate of interest is somewhere between -2.9% and -4.5% (the chart above uses the RPI).

As we've discussed many times, inflation is the ultimate stealth tax. It is a tax imposed by governments on those holding its debt (or at least its debt that isn't specifically indexed against inflation). And anyone holding their savings in a simple savings account at a bank or building society - still more anyone holding their savings in £20 notes under the mattress - is paying towards that tax.

And let's just remind ourselves of the Bank's shocking record on inflation. Since 2003, when the 2% pa CPI inflation target was first set, inflation has averaged 2.5%, and at times during the last couple of years it has been far higher:

And the prospects for future inflation don't look a whole lot better. Sure, the Bank regularly tells us that the current inflation overshoot is temporary, and that "inflation expectations remain well anchored", but frankly they've been singing that same tune for months now. And every time they publish a new Inflation Report they postpone the moment when inflation is expected to return to target. Just as a reminder, see if you can spot the difference between these successive forecasts:

Chart 1 - Bank of England inflation forecast February 2009

Chart 2 - Bank of England inflation forecast February 2010

Chart 3 - Bank of England inflation forecast August 2010

Spot it?

Yes, that's right - back in Feb 2009, just before they put the printing press into overdrive, they reckoned inflation now would probably be between 0% and 1%. A year later in Feb this year, they reckoned it would be between 1% and 2%. But now we're actually here, it's turned out at 3.1%.

Yet despite this dismal forecasting failure, they still continue with pretty much the same old story - there's no need to worry about that roaring printing press because inflation is about to fall below target.

Well, frankly, roaring printing presses should always worry us. And they should always worry savers in particular.

Of course we're not alone in our concern. The excellent Liam Halligan has consistently warned of inflation disaster ahead, and there are others. And now even those who have previously supported the roaring presses are starting to worry.

This morning we get a startling recantation from the Telegraph's Ambrose Evans-Pritchard. He is now alarmed by recent statements from the US Fed, seemingly intent on debauching the dollar:

"I apologise to readers around the world for having defended the emergency stimulus policies of the US Federal Reserve, and for arguing like an imbecile naif that the Fed would not succumb to drug addiction, political abuse, and mad intoxicated debauchery, once it began taking its first shots of quantitative easing.

My pathetic assumption was that Ben Bernanke would deploy further QE only to stave off DEFLATION, not to create INFLATION. If the Federal Open Market Committee cannot see the difference, God help America.

We now learn from last week’s minutes that the Fed is willing “to provide additional accommodation if needed to … return inflation, over time, to levels consistent with its mandate.”

NO, NO, NO, this cannot possibly be true."

Well done to Pritchard for apologising to those of us who have always taken the other view, but I'm afraid it may be too late. Those of us who recall the 70s remember only too well the global inflationary havoc caused by a soft money Fed intent on monetising the post-Nam post-Big Society Federal debt.

So what to do*?

First, get rid of your savings accounts. Don't wait for the Bank of England to rob you of your savings - do it now.

You need either to switch into index-linked gilts (although note that short maturities are priced to deliver a negative real return - so you'll still lose some of your capital), or switch into a real asset. You're probably too late for gold or grain futures, but the struggling UK property market - yes, that old one - might be worth a look. Cam's government have made it quite clear planning restrictions will be maintained, so if you can drive a fire sale deal, long-term supply shortages (at least in the South East) are far more likely to protect your savings than a building society account on 0.23%.

Of course, if you're a widow or an orphan dependent on the income from your savings, then you're stuffed. Just like always, you are set to be the schmucks who have to pay for the mess visited on us by a bunch of vainglorious incompetent politicos.

Why do we elect these people again?

*Terms and conditions apply. The value of investments can go down as well as up, and Tyler hereby affirms amd asserts that he is in no way qualified to offer investment advice to you or anyone else. Including himself.

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www.gudanggrosiran.com Categories: central banks, inflation

She Canna Take Much More Of This Captain

Tyler has learned that the Bank of England is following a revolutionary new approach to monetary policy. According to a top secret Bank report, it works by exploiting "the expansion of space-time as a consequence of the vacuum ground-state of higher dimensional graviton fluctuations" (see key formula above).

As you will know, this is the approach long envisaged in sci-fi, most famously in the warp drive that powered the Starship Enterprise. But never before has a central bank had the sheer dilithium balls to fire it up for real. The Bank is boldly going.

So how's it working out?

Today we got an update. According to the Bank, we're rapidly winding up to warp speed, and from its current slump, GDP is about to make the jump to hyperspace:

Growth will be so strong, that we'll have recovered our entire output fall within two years. It will be the fastest strongest recovery we have ever had from any slump.

And it's all thanks to the warp drive's combination of zero interest rates and a roaring printing press.

Unfortunately, at this speed, the old ship is beginning to vibrate rather alarmingly.

For one thing, the exchange rate is down 25% since we first hit the asteroid belt back in 2007 (ERI = Exchange Rate Index - sterling's value against a basket of currencies):

That's one helluva fall, and it's made us all poorer because it has increased the price of imports. Which also means upward pressure on inflation.

And surprise surprise, the Bank is now warning that inflation itself is set to increase:

"Inflation is likely to rise sharply to above the 2% target in the near term, reflecting higher petrol price inflation and the reversal of last year’s reduction in VAT."

Which sounds pretty worrying. Although the Bank reckons it's nothing to worry about, and inflation will subsequently come right back down again later:

Do you believe that? Do you believe it any more than you believed all those dire forecasts of falling prices/deflation?

Er, no.

The fact is that this warp drive technology remains highly experimental and very scary. The various captains up on the bridge may believe they can control it. But down here in the crew quarters we're not at all convinced the ship can take it.

We do not want to perish in an inflationary black hole. And now that the Bank reckons we're back on track for growth, we think it's time to disengage the warp drive, and go back to good old fashioned propellor power.

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It's Very Simple - We're Skint

Just like the ones the Bank of England has installed

On a day when the Bank of England announced it was printing another £25bn to tide the government over the next couple of months, eminent monetary expert Sir Stuart Rose explained our central problem from a technical perspective:

“We are skint."

Yes, indeed. Sir Stuart has put his finger on the Big Issue. He continued:

“This Government and the future Government have got to make some hard decisions about refilling the coffers”.

Spot on.

Which is why the Bank of England's decision to extend its Quantitative Easing (QE) programme yet further is so very worrying. It is allowing the government to put off all those hard decisions in the short term, at the cost of making them even harder to take when they eventually become unavoidable.

 We've blogged our central concern about QE many times: that it is a huge experimantal gamble with our future inflation prospects; nobody has a clue how the Bank will manage to put the printing press into reverse when the time comes, or even how we'll recognise that time; and all of history tells us they won't manage it (eg see here).

 But QE has another equally worrying dimension. It has allowed the government to fund itself by printing money rather than issuing gilts*, thereby avoiding facing up to the discipline of the international bond markets.

 As we know, QE was initiated to "get credit flowing again". The idea was that the banking collapse had broken the normal credit pipeline. Banks were no longer prepared to lend even to viable businesses, let alone private customers, and the economy was dying of thirst. So the Bank of England would step in to flood the financial sector with cash, thereby hoping to get things moving again.

 But in practice, the Bank has done its flooding not by investing in the debt of cash-strapped companies, but principally by purchasing government gilts in the open market. Here's its own summary (to end-September):

So since March the Bank has printed around £175bn of this extra cash, and virtually all of it has gone to buy government debt.

 Now, by some spooky coincidence, £175bn just happens to be exactly what the government projected in its April Budget as being its total borrowing this year. And by an even spookier coincidence, today's announced £25bn increase in QE for the rest of the year just happens to be the borrowing overrun the government will announce in its forthcoming Pre-Budget Report (don't believe me? just watch).

 Yes, we really have got a government financing the largest budget deficit in the developed world by running the printing press.

And even if we somehow manage to put the whole process into reverse before inflation takes off, the Bank will then be attempting to sell back all the gilts it's now buying at a time when the government is still issuing shedloads. Which is a surefire recipe for a huge hike in gilt yields (long-term interest rates), and an explosion in government debt interest costs.

And you know the really odd thing? Virtually the entire economics establishment seems to think it's fine. Indeed, Tyler has just listened to the New Statesman's economics correspondent telling BBC R5 listeners that it's a "no-brainer". Even though there's virtually no evidence QE is supporting the economy as intended, and even though he couldn't explain how the Bank would ever know when to stop.

Very scary.

Extraordinary measures like QE may have been justified while it looked like we were tipping into the Second Great Depression. But we are through that now. What we are looking at from here is a miserable decade of slow grinding recovery. It may even turn out to be a Japanese-style "lost decade".

But it is a dangerous delusion to think we can get ourselves back on a growth path by running high budget deficits financed with a supercharged printing press. That is the age-old recipe for inflation, crises, and decline.

Instead, we need to listen to Sir Stu. We really are skint, and we really do need to take some hard decisions to refill the coffers. And just so we know, here they are:

1. Public spending must be cut by around 15% (ie £100bn pa)
2. Taxes on enterprise and employment must be slashed - we have to earn our way back to prosperity 

Nobody's saying it will be easy. It won't.

But continuing to print money in the vague hope that we can somehow get the economy back to sustainable growth is going to make our longer term problems a whole lot worse.

*Footnote Yes, OK, the government has continued to issue gilts. But since the Bank has been buying them back at the same time, in effect, net issuance has been close to zero.

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Splitting The Megabanks

The idea of splitting our megabanks between their high street and casino components is fast becoming mainstream.

We've blogged this many times of course (eg here), and last night the Governor of the Bank of England amplified his own call for such a split. Calling our open-ended taxpayer guarantees "the biggest moral hazard in history", he says:

"Anyone who proposed giving government guarantees to retail depositors and other creditors, and then suggested that such funding could be used to finance highly risky and speculative activities, would be thought rather unworldly. But that is where we now are...

The aim of policy should be to minimise or eliminate that subsidy. Separation of activities helps not hinders that objective, not least because it is the mixture of activities that reduces the robustness of the system."

And we need to get on with it. As we blogged here, zero interest rates and QE mean that the next bubble is already well on the way. This morning the FT's Martin Wolf - labeling our international megabanks cuckoos in the nest - says:

"We must focus on the core issue. Trying to make financial systems safer has made them more perilous... There is a danger that this rescue will lead to still greater risk-taking and an even worse crisis at some point in the not too distant future.

Either we impose a credible threat of bankruptcy, or institutions we have to support are made safer, or, better, we have both of these. Open-ended insurance of weakly regulated institutions that take complex gambles is intolerable. We dare not return to business as usual. It is as simple – and brutal – as that."

Yes, the G20 and the international banking establishment want us to focus on better regulation (such as so-called macro-prudential regulation). And that certainly has a role to play. But we are fooling ourselves if we think our regulators will ever be clever enough to cover all the necessary bases. Governor King is someone who's seen the difficulties of regulation up close and personal, and he says:

"The sheer creative imagination of the financial sector to think up new ways of taking risk will in the end, I believe, force us to confront the “too important to fail” question. The belief that appropriate regulation can ensure that speculative activities do not result in failures is a delusion."

Naturally the megabankers don't want to be broken up - which is why their own economists and pundits issue all those dire warnings about how break-up would undermine the British economy.

But we taxpayers simply can't afford to go on as we are. Relative to GDP, the financial crash hit us harder than any other major economy. As Wolf reminds us, the IMF says UK banks are facing writedowns on bad loans of around $600bn, which is 60% of the US total in an economy that is well under 20% of the size. Bearing risks of that magnitude is not sustainable either for taxpayers or our economy.

So if we're all clear about that, the next question is why are our politicos still in the dark?

Well, of course, they're not really in the dark at all. The reason they don't want to split the banks is that for the last 30 years the financial sector has been the UK's big success story. Broadly defined, it has created 6 million jobs (see this blog), and generated huge amounts of tax revenue. Given our rocky future, politicos of both main parties don't want to accept the Golden Goose may have turned into a cuckoo.

But that just won't do. Yes, there are risks in splitting the banks - especially if we do it unilaterally - but inaction runs the very real risk of an even bigger catastrophe just down the road.

Moreover, we don't reckon a split would lose us the entire investment banking industry. We'd still have the skilled labour force and infrastructure (including the English language) most other European countries lack.

And we could substantially soften the move with some accompanying measures designed to keep the bankers here - eg rescind the new 50p tax rate (see this blog), pledge to end retrospective bank windfall taxes, and promise to continue light touch regulation for non-high street banks. We should have no problem with bankers getting rich - as long as they don't do it at our expense.

Come on George. Think of us taxpayers. Surely you can't be that dependent on megabanker subs?

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www.gudanggrosiran.com Categories: bank bailouts, bankers, central banks

Grandstand Governance

You're paying for this

Does anything useful ever come out of these global grandstanding opportunities?

This week's G20fest was billed as the moment when "world leaders" would agree a new governance regime for the international financial system. This was the moment when the banks would be brought to heel, and when the big surplus nations (especially the Chinese, but also the Germans and the Japanese) would be bound into a new economic settlement in which they would spend and import more.

In practice of course, we'll get none of the above. Instead, we're going to get an agreement to have even more G20fests. Whoopeee!

The real purpose of these meetings has been highlighted all too clearly by the horrifically embarrassing sight of our unloved dead duck Prime Minister* scurrying round the UN kitchens trying to pin down St Obama for a photo-op.

As is painfully obvious, one year on from the Great Crisis, our rulers have made virtually no progress on sorting out the issues that gave rise to that crisis.

There is no agreement with the surplus nations on how they will do their bit by correcting the imbalances in their own economies. And there is no agreement on how we can protect ourselves from a future global banking collapse.

Indeed, on the latter point, as City veteran Terry Smith reminded us on BBC R4 Today this morning, our rulers are refusing even to discuss the giant elephant rampaging around their gilded conference halls.

The pachyderm in question? As we've blogged many times (eg here), we need a new Glass-Steagall to separate high street banking from investment (aka casino) banking. We can no longer afford to have the two activities co-existing in the same megabanks.

Because although we all learned from the Great Depression in the 30s that taxpayers have to guarantee high street deposits, we most certainly do not need to guarantee banks' casino activities. And it was our implicit guarantee of those activities that allowed the players to access the cheap funding, that inflated the huge bubble, that finally popped last year.

Sure, in theory we might be able to keep ourselves safe through better smarter bank regulation, rather than resorting to the crude blunderbuss of Glass-Steagall. But in practice, we just ain't that smart.

Among other things (as the now reviled Alan Greenspan always said), no regulator or central banker has ever come up with a way of definitively identifying a bubble before it pops. And even if they did, politicos riding the wave of an economic boom would never sign up for sticking in a pre-emptive pin.

And in the real world, those superbright all-seeing regulators of myth and legend don't actually exist. Indeed, our own bumbling regulators couldn't even control the relatively simple activities of the Crock.

No, to make ourselves secure, we need to split retail banking from investment banking. Just like it always used to be.

And we need to do it on an international basis, because otherwise the megabanks will simply migrate to the countries where they are not required to split.

So why hasn't the G20 tackled the elephant?

Well, because for one thing the megabanks don't want them too. And for another, the politicos are desperate to avoid anything that might smother the recovery, and breaking up the banks would inevitably restrain the future growth of credit.

Which is a problem.

Because taking a view slightly longer than the next election, a return to easy credit is the one thing we do not need. And unless we take the necessary action now - while minds are still concentrated by the crash - the will to act will simply evaporate (if it hasn't already done so).

Might we expect more from Cam and Os? Sadly not. They have already indicated they have no plans for a Glass-Steagall.

So unless St Vince somehow finds his way to the controls, it looks like taxpayers are skewered on the banking hook for the forseeable future.

Gaaaaaaaaah.

*Footnote We've already blogged the BBC's mini-series the Love of Money, but last night's nearly made me swallow my false teeth. Entitled Back from the brink (click on link to watch again), it painted Brown as the saviour of the global banking system. No really. It reckoned the man who spent this week trying to get his snap taken with Obama, came up with the genius solution, which was for taxpayers to inject capital into the banks rather than simply buying/guaranteeing their toxic assets. Apparently nobody else apart from Brown and that Shitty woman had thought of that. Maybe the BBC overlooked the fact that within days of Lehman's collapse - and weeks before Brown's emergency purchase of all those bank shares - the idea of government equity injections was being openly discussed all over the place, including the FT, and even our own humble blog here. Surely even the BBC can't rewrite history this soon after the event?

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www.gudanggrosiran.com Categories: bank bailouts, central banks, humbugs

Same Old Same Old

The roller-coaster of government debt - here we go again

Time to catch up after our staycation in the grey sunless Westcountry (hope Mr Dale has better luck this week). Except there's nothing much to catch up on: it's just more of the same old grey sunless same:

1. NHS sick leave

As we've blogged many times (eg here), sick leave in the NHS is higher than in any other organisation known to man. Updated stats were released last week:

"The average NHS worker takes 10.7 days off sick a year, compared with 9.7 days for the public sector as a whole and 6.4 days in the private sector. The service loses 10.3 million working days annually... costing £1.7 billion per year."

Why are they so sick?

"The first national audit of staff habits has found high rates of obesity, smoking, absenteeism and poor mental health."

This will come as no surprise to anyone who has ever dined in an NHS hospital canteen, as we did here. Amidst the vast steaming piles of chips and Ginsters, you're hard pressed to find anything even vaguely healthy on the menu. And by far the fattest diners are members of staff.

Worse, it now transpires that NHS staff can continue to claim overtime and anti-social hours allowances while they are actually off work.

Now what kind of dope would negotiate a pay deal like that?

Apart from our swaggering clothead rulers, that is.

The simple fact is that the monstrously obese NHS is unmanageable. Nobody - not Sir Terry, not Sir Stuart, and certainly not Shaky - has a prayer of mastering it. It needs to be broken up into much smaller and competing social insurance providers.

2. MoD incompetence

The latest cover-up over MoD procurement incompetence is still making headlines:

"The British military operation in Afghanistan is being compromised by an “incompetent” Ministry of Defence equipment programme that is £35 billion over budget and five years behind schedule, a leaked confidential report has revealed.

The highly critical internal MoD report, written by a former defence special adviser, says that the department is running a “substantially overheated equipment programme, with too many types of equipment being ordered for too large a range of tasks at too high a specification”.

We already blogged this leaked report here. But equally astonishing is last week's news that MoD underestimated the likely cost of the Iraq War by factor of three:

"British officials failed to predict both the length of the UK engagement in Iraq and the financial drain. Treasury documents from September 2002 show it greatly underestimated the costs, believing British troops would need to remain “fully engaged” in Iraq for just six months.

In a document drawn up for Ed Balls, special adviser to Gordon Brown, the then chancellor, officials said the “central estimate” for the cost of “preparation, deployment and return” of UK troops from Iraq was £2.5bn."

The latest cost estimate is £8.4bn - itself almost certainly too low.

As we've said before, you wouldn't trust the MoD to buy your weekly shopping, let alone put them in charge of our £48bn pa defence budget.

But we can't privatise defence. Which is a real problem.

(While in the Westcountry, Tyler met a man in a pub. This particular man's firm supplies the MoD with top-secret "if I told you I really would have to kill you" IT kit. He reckons they've now supplied three generations of said kit, but as far as he knows, none of it has ever been used. Insurmountable "source code" conflicts with other kit MoD has bought separately from the US means that the vital components can't talk to each other. So it's all "lying in a cupboard somewhere". Not that he's complaining - the exercise has earned him a rather nice second home.)

3. Deeper in Debt

The monthly public sector borrowing figures were the usual horrorshow. Borrowing in July was £13bn higher than last year, and net debt has already reached £800bn. At this rate we will rack up the trillion sometime next summer.

As it happens, Tyler spent last week poolside huddled over a radiator, reading The Cash Nexus by Niall Ferguson, a lengthy examination of the historic relationship between money, power, and politics. And government debt is a large part of the story.

To be honest, Tyler was a little disappointed. While the book is stuffed full of government financial fiascos, bungling politicos, and greedy bankers, somehow it never quite takes flight: it's less than the sum of the parts.

Still, Ferguson does remind us just how often heavily indebted governments inflate their way back to solvency. The Nineteeth Century British example of a government actually redeeming its huge debts (see Ferguson's handy chart above) is very much the exception. Throughout history, most governments have simply defaulted via inflation.

It is a salutary warning to all savers, especially pensioners. It says that in terms of the political calculus, they don't count. They are outvoted by debtors, and those who can more easily protect themselves against rising inflation, including of course, bolshie unionised labour (as happened in Weimar Germany).

Which naturally brings us to...

4. Inflation

Last month's inflation numbers underlined the stark reality that the deflation scare is a con: it simply ain't gonna happen.

The CPI came in at 1.8% (year-on-year), unchanged from last month. And that despite the fact that most mainstream forecasters had told us there'd be a dip.

All the more reason then, to worry about the Bank of England's roaring printing presses (eg see this post).

And even more reason to wonder WTF the Bank Governor actually wanted to crank them up even further. Has he lost the plot? Or is this by some chance the very same Mervyn King who signed that notorious 364 economists letter opposing fiscal discipline in 1981?

He's going to have to steady himself: with Bernanke calling the end of the US recession, those presses will need shutting down any time now.

Can't say we're optimistic. Maybe we need a holiday.

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www.gudanggrosiran.com Categories: central banks, debt, inflation, mod, nhs

Pumped-Up On Experimental Drugs

At least he tested it on himself

As regular readers will know, we are very concerned that the Bank of England is overdosing us with monetary stimulants. We're especially concerned at the Quantitative Easing (QE) programme - or printing money as we old-timers still call it.

Last week, against all expectations, the Bank announced a further dose of QE, taking the total from £125bn to £175bn. Which has worried us even more. Because as others have said, QE is an untested drug, and we've already swallowed a very large dose. Common sense surely tells us it might be best to wait a while before taking yet more.

Yesterday the Bank of England tried to explain their thinking. They said that without the additional dose of QE, CPI inflation would remain well below their mandated target of 2% for the next two years and beyond. Here's their fan chart showing just that:

As we can see, with QE (aka asset purchases) limited to £125bn, inflation is expected to fall well below 2% - although not, please note, into deflation territory. And two years out (the vertical dotted line) it's still expected to be below 2%. Or rather, there is only around a c 20% chance it will be at 2% or above (the bands on the fan chart are supposed to denote probabilities).

So to address this, the Bank is deliberately stoking up inflation by pumping in a further £50bn of QE. Here's what that does to their outlook:

As we can see, the extra dose does the trick and inflation over the next two years is lifted much closer to the 2% pa target.

Job done.

Er, yeeesssss... except...

For one thing, there are increasing signs that world growth is already through the worst, and turning up. Chinese growth is moving forward again (currently 8% pa), the US is widely expected to bounce back to 2% next year, and just this morning we've had news that GDP grew in both France and Germany during Q2. The massive reflation medication worldwide is feeding through.

Which means that world inflation is no longer out for the count. Commodity prices, including oil, are now well off the bottom - over the last month alone, the Economist Commodity Index (in dollars) is up 10%.

Given Britain's chronic long-term problems with inflation, and the potential for weak sterling to import a lot of inflation very quickly, this is not a world in which we should be taking risks. This is a world in which we need to be very careful indeed.

And as for the Bank's highly impressive fan charts, we just need to remember one simple fact: no matter how glossy the presentation may be, the underlying forecasts are no better than the flip of a coin. Nobody has the faintest idea whether inflation in two years time will turn out to be 1%, 2%, or 5%.

Because that's just the way economic forecasts work. You can employ the best brains, and construct the most sophisticated and detailed models available to humanity. But all those known unknowns and unknown unknowns make it impossible to have much confidence in your projections.

The Bank certainly can't claim any particular record of forecasting success. Here's their inflation fan from last August - just 12 months ago:

Pretty different, huh?

And in fairness to the Bank, they admit their record is not that brilliant. They say (page 48 here)that over the last decade their one-year forecasts of inflation have turned out within their 50% probability range (the dark red bit of the fan) only four times out of ten (ie a supposed 50% probability range has turned out to be closer to 40%). Moreover, their past forecasts have been biased down (ie inflation has turned out higher than forecast two to three times more often than turning out lower).

So we can't have a lot of confidence in the doctor's judgement here. In the past, he has not been particularly accurate in his diagnosis, and has tended to underplay the risk of inflationary fever.

And now he's administering huge doses of untested drugs.

Hmm.

Feel lucky?

PS Of course, as we've blogged before, inflation won't be bad for everyone. Debtors - including the government - will benefit as the real value of their debt gets eroded away. But savers, widows and orphans will be punished most savagely. Just like they were back in the 70s and the Weimar Republic. Meanwhile, the banks are coining it in, as the Bank of England shovels in cheap cash for them, while home owners and small business get racked by higher borrowing rates. Ah, it's a cruel cruel world.

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www.gudanggrosiran.com Categories: central banks, inflation