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Inflation set to hit 3% after shock increase in October

Inflation shot to a five-month high of 2.7% last month. Experts say the cost of living is bound to rise further as higher energy bills hit homes.

 
Inflation set to hit 3% after shock increase in October

Inflation shot to a five-month high in October as the trebling in university fees and rising food prices forced up the cost of living.

Figures from the Office for National Statistics (ONS) showed annual consumer price inflation leaped to 2.7% from 2.2% in September, way ahead of economists’ forecasts.

The main factor in the shock rise was the controversial increase in maximum university tuition fees. These have risen to £9,000 a year from just over £3,000, a move that on its own added 0.3 percentage points to the inflation rate.

Higher food prices, exacerbated by the rainy weather spoiling the potato crop and pushing up the price of the staple vegetable, were also to blame, said ONS.

The Treasury said the rise in inflation was ‘disappointing’ as experts predicted inflation would rise above 3% as higher energy bills hit households later this year.

Len McCluskey, general secretary of Unite, the union, said: 'We are in a desperate situation where millions of working people and their families are juggling rising food and energy bills when household incomes for the majority of people have not kept pace in recent years. Where families lead in suffering, shops and businesses will follow.'

Chris Williamson, chief economist at Markit, the financial data provider, said consumers were unlikely to see CPI reach its 34-month low in September for some time. ‘The Bank of England's updated growth and inflation forecasts, due tomorrow, are likely to show that inflation will rise further in coming months, due largely to higher energy and food prices.

‘The Bank's current estimate that inflation will fall below its 2% goal by the end of 2013 is looking somewhat optimistic as a result,’ said Williamson.

David Kern, chief economist of the British Chambers of Commerce, urged the Bank of England not to extend its ‘quantitative easing’ or money printing programme, which is widely viewed as inflationary.

So far the Bank has pumped £375 billion of new money in to the economy in the past three years. Last week it refrained from announcing a further increase in QE although it did say it would transfer up to £35 billion of cash from the scheme to the Treasury.

Kern said: ‘Higher inflation is unwelcome news for the UK economy at a time when the government is persevering with its tough austerity plan. In the face of major economic challenges, there is only limited scope for the UK to rebalance towards exports and investment over the next year. In these circumstances, the boost to real incomes resulting from low inflation could be one of the main factors for underpinning domestic demand in 2013.

Rising inflation is bad news for savers and pensioners. Moneyfacts, the financial products data provider, said there were only 40 standard savings accounts and ISAs offering a rate of 3.37% or above that would allow savers paying the basic 20% rate of tax to beat inflation.

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62 comments so far. Why not have your say?

Alan Tonks

Nov 13, 2012 at 13:05

You have to be joking; the real figures would be a shock though.

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Anonymous 1 needed this 'off the record'

Nov 13, 2012 at 13:20

Bit of a coincidence that the Sep figures were in the dip?

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Jonathan

Nov 13, 2012 at 13:35

£% Shock increase?? Rubbish, inflation of more than this is only to be expected with the BOE printing £375 billion for QE and over £100 billion for other purposes.

Until the change the way inflation is calculated so it doesn't include anthing that goes up in value this is to be expected.

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Geoff Downs

Nov 13, 2012 at 13:52

QE is possibly raising food and commodity prices but doubt it will create inflation in the longer run.

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Terminator

Nov 13, 2012 at 13:56

The fundamental problem, as I have always said, is that the fake boom of the Blair years was itself a money printing excercise on a level never before seen in history. Millions of people who benefited from that (often by trousering staggering amounts of money in tax free capital gains from fake house price increases deliberately engineered for the very purpose) are still sitting on that (re investing etc) and wont give it back. The 2 tier economy we have today is the result. It is going to get worse, look at some of the ridiculous pensions being granted to the likes of Merv King etc £300,000 per year ? It is staggering, no one is worth that kind of pension. A property crash is due and will only be a matter of time. The most terrible time to be down on luck in the UK, simply appalling and the people who trousered the fake money are a disgrace to decent people. The newer economists (many graduates) have absolutely no clue what it was like pre 1997 and never will.

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Jonathan

Nov 13, 2012 at 14:40

Geoff Downs

The ONLY cause of long term inflation is printing money by central banks.

How do you explain that everything is 10 times the price it was in 1975? Wages are 10 times the amount a loaf of bread is 10 times the amount.

How do you explain the inflation in Weimar and Zimbabwe?

To say printing money does not cause inflation is possibly the biggest lie economists tell us.

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Geoff Downs

Nov 13, 2012 at 14:55

What is needed to cause inflation is continual expansion of bank lending and consumer borrowing. Banks are more careful who they are lending to and in any case consumers are already in debt and can not continue to borrow indefinitely.

To cause inflation this extra money has to get into the hands of consumers and then be spent.

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joe stalin

Nov 13, 2012 at 14:56

You may have a point that economists don't have a clue but I don't buy the house market collapse argument. A pity because I would quite like to buy a nice little pied a terre in Mayfair for the kids when they leave the nest or for me to stop in after a night out with the mates so I don't have to worry about the last train home. ( for which the annual season ticket is now £4200/yr.more than doubled over the last 10 years)

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clive chafer

Nov 13, 2012 at 15:00

Quite so Terminator; I couldn't agree more.

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Attila

Nov 13, 2012 at 15:26

Well said terminator!

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madmitch

Nov 13, 2012 at 15:38

Does the printing of money, or QE as its described actually fuel inflation?

Surely it isnt simply the act of printing the money that would fuel inflation, the money has to get in to the economy in general to generate the demand which would in turn drive up prices. This just isnt happening with the extra money that has been created over recent years.

No, all the infationary pressure we are under nowadays is driven by corporations getting as much from the consumer as they can.

QE could fuel inflation if the money was allowed to trickle down into the economy, but in reality this isnt happening, the banks and financial institutions are keeping this money locked in at the top of the pyramid.

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William Phillips

Nov 13, 2012 at 15:41

RPI is up 0.6 to 3.2%, the biggest monthly jump since April 2010- not that the editor of Citywire thinks the index most relevant to his readership is worth mentioning.

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Geoff Downs

Nov 13, 2012 at 15:45

madmitch,

Spot on. Remember as well consumers are heavily in debt so they are less likely to borrow.

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Terminator

Nov 13, 2012 at 16:42

There is simply no way that prices should have gone up by the 300% they did in 5 years(an ENOURMOUS amount, allowing many to simply print themselves huge fortunes ala Candy brothers and many others) huge sums were transferred via stealth, just see how many MPs have 'portfolios'of umpteen properties. This used to in the old days be a valid way to invest for shrewd people who had steady jobs etc, but the fake boom and insane lending turned it into blatant robbery. It has caused not just the biggest depression in history, but ensured many will be poor for life unless radical steps are taken, leaving the UK as a massively divided society.

It is so obvious that the silence about the whole issue from Blair and current MPs is ear splitting.

Perhaps this is intentional, as without question the financial system is so wide open to manipulation that it could easily be so. If I were one of the ruling classes I would certainly reason that to be safe it is better to have a poor population incapable of revolting than a burgeoning rich one which might get bigger ideas!

Certainly to say that things 'just got this way' is perhaps stretching credibility somewhat.

Look at the celebrity culture where we have millionaire after millionaire pissing about on camera without a care in the world, gathering more wealth from the TV monopolies who treat us with programs about ordinary poor people (Corrie, Eastenders) acted out by millionaires who retire to their mansions, or appear again on some game or celebrity show.

It has become so bad I threw my TV away and never watch anything as it would just be stupidity to do so.

The inequality I witness and am included in now is profoundly sad as not only are there very few decent jobs, those that exist often pay barely enough to survive let alone advance financially in any reasonable manner, imagine how sole destroying it is to be told to work for minimum wage by some rich kid who inherited large sums thanks to a fake boom.

For every high roller printing himself large sums in London there are probably 10 equally bright people who are not only having to do demeaning work in the provinces, but also getting very little for it.

Its not the UK I grew up in.

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Geoff Downs

Nov 13, 2012 at 16:50

I may be wrong here but the wealth gap between rich and poor is not the same thing as inflation.

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Jonathan

Nov 13, 2012 at 17:17

Geoff Downs,

You are right. Inflation is not a measure of the rich/poor gap but the increase in prices of things. Inevitably and obviously caused when central banks print money.

http://www.investopedia.com/video/play/monetary-inflation

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MoneyObserver

Nov 13, 2012 at 17:30

re - Terminator

"Look at the celebrity culture where we have millionaire after millionaire pissing about on camera without a care in the world, gathering more wealth from the TV monopolies who treat us with programs about ordinary poor people (Corrie, Eastenders) acted out by millionaires who retire to their mansions, or appear again on some game or celebrity show"

Yes - it is very noticeable that austerity does not seem to impact showbiz people or media people.They do seem to be parasites.

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Hotrod

Nov 13, 2012 at 17:45

I was interested to read a recent statement by Mervyn King who explained that although the BoE had used the money created by quantatitve easing to buy Govt. securities. These bonds were still redeemable at face value at maturity, and did not excuse the treasury from paying the bi-annual coupons on them. In fact the bank had received the coupons payable to date, and that this money was sitting in a dedicated account.

He admitted that continued accumulation was embarrassing and suggested that one possibility was to simply hand back the interest so earned to the treasury. (If that's not cooking the books I don't know what is!)

Lord Turner has said that if he becomes the next governor he will write off these fiscal debts by cancelling the bonds. Mervyn King disagrees stating that the quantatitive easing programme will have to be reversed at some stage in order to control interest rates. To my simple mind M K's devious wangling can only compound complexity and will lead to chaos. Hopefully Lord Turner will get his job.

With regard to inflation, so far I have been able to find ways to mitigate its affects, I now pay bills online whenever possible, also online shopping allows me to search for bargains as never before.

Increases in food and energy can be offset by cheaper clothes and big ticket items. My observations suggest that many people are doing the same as I am.

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William Bishop

Nov 13, 2012 at 17:52

Increases in university tuition fees and the price of potatoes seem to me to be a rather narrow base for erecting all these complexities........

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Jonathan

Nov 13, 2012 at 17:55

Hotrod,

Yes, If the BoE don't take any interest on the bonds and just keep buying more debt there is little difference, other than one level of indirection, between Zimbabwe (printing money to fund government spend) and the UK.

More interesting areas of discussion are how close the QE money creation matches the deficit (it's pretty close. A measure of this could be used to accurately predict when more QE is on its way.

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snoekie

Nov 13, 2012 at 21:25

Tsk, tsk Mr King, no surprise, wrong, yet again. When those in the palace recognise this and not do a Patten, sack the barsteward sans pension for incompetence, alon with his deputies,.

We need a clean broom, or is it a bulldozer to clean out the Augean stables at 1 Threadneedle Street? Full of excrement.

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snoekie

Nov 13, 2012 at 21:26

I should have said "when are those"........

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snoekie

Nov 13, 2012 at 21:28

Another piece of effluent inherited from Brown and smelly............

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dogdays

Nov 13, 2012 at 22:07

Another small step down the road that leads to lower wages and standards of living, for the British people. It is of course inevitable to make the country competitive in the modern world now that the borrowing has had to stop, but still very painful for the people to swallow.

I just wish all sections of society understood what is happening to us and moderated their antics accordingly and stopped going on as if nothing has changed.

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Geoff Downs

Nov 13, 2012 at 22:15

dogdays,

What is happening to us? What are people doing that they shouldn't?

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Terminator

Nov 13, 2012 at 23:18

Geoff Downs How naive you are if you think that the Rich/Poor divide doesn't fuel inflation. A Newsreader paid £1 million a year (A huge sum of money) can do a large amount of damage with that money if they wished, and some almost certainly do.

Additionally, 'What is happening to us?' Excuse me, are you actually on this planet ?

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Terminator

Nov 13, 2012 at 23:34

Just to reiterate, the Blair years 1997 - 2003 were the most damaging to ordinary people in economic history. A travesty of simply epic proportions, but not felt by those with cast iron jobs and pensions.

Having said all that, I think there is much more that doesn't meet the eye and what you may at first think is the real politics actually isn't, it goes much deeper and we are surrounded by greed and corruption at every single level, so much so that it just isn't worth becoming involved.

To quote John Nash ''This began, most recognizably, with the rejection of politically-oriented thinking as essentially a hopeless waste of intellectual effort' by which I'd say he meant that its all over bar the shouting and has been for a long long time and that was 40 years ago. Its clear that the so called politicians are merely themselves puppets in the grand scheme of things but of course have the sense to handsomely reward themselves in the process.

Personally, I have been extremely naive and if I could go back 30 odd years knowing what I know now, I would have definitely done everything differently.

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Terminator

Nov 14, 2012 at 00:20

Finally, you have to surmise that the people in charge during this period are not idiots, they are almost to man multi multi millionaire businessmen and clearly very shrewd people. Which brings me to the frightening conclusion that amid all the smokescreens and the laying off the blame on a wide variety of so called malaises, IT WAS AND IS WHOLLY INTENTIONAL !

That, I suppose is all I have to say on the subject as a casual onlooker without a pot to piss in.

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Terminator

Nov 14, 2012 at 00:31

Except that, as I have said before, I seem to have had my retirement age put back to around 92.

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Geoff Downs

Nov 14, 2012 at 09:13

Terminator,

Our economy is a consumer based one. For many years now we have had little manufacturing industry. To maintain that economy or expand it we have to have bank lending and consumer borrowing, which certainly in the Blair years we had.

Government also spent and borrowed, so when the crisis hit in 2008, both the consumer and State were in debt. Debt is not altogether bad IF it is less than the growth in an economy. I cannot remember many complaints from people in those boom years, but of course the Government wanting to get elected were not saving for a rainy day.

QE is an attempt to return us to easier credit and more debt. It fails because citizens are already trying to pay back existing debt.

We are where we are through many, many years of failed economic policies. The problem now is to find new ways, both to get out of this mess and move forward.

If you have constructive ideas you should say what they are, rather than dramtic statements about one group or another. By the way inflation is not caused by the wealth divide.

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Ian Lewthwaite

Nov 14, 2012 at 09:25

WHEN are we going to be told the truth by any Government? you dont need to be a Govt statistician to know full well that the true inflation figure is nearer 5%.

At the same time the Bankers who caused the problem retire with telephone number pension, lets have some JUSTICE for once and repatriate all the excess monies they "stole" from the businesses they were in charge of or contributed to the banks downfall, leaving them with 2x the average wage, which is being more than generous. Bearing in mind that a Captain should go down with his ship. Lets have a complete break from this old boys act of protecting incompetents and the just plain greedy!

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Geoff Downs

Nov 14, 2012 at 10:35

Ian,

Regarding your second paragraph, are you saying the Government should have let banks fail?

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Terminator

Nov 14, 2012 at 12:13

@Geoff Downs I'm afraid I disagree, inflation IS caused by the wealth divide, as evidenced by the massive poverty in existence today and the smoke and mirrors policies of respective 'governments'

Your quote

' It fails because citizens are already trying to pay back existing debt'

fails to highlight a key issue - Why the debt ? The creation of fake money ?

I notice many of Citywire readers are in London where the culture prevails unabated, and social cleansing of residents forced out by the continuing property bubble continues. Those people will never live or work in London again and will exist in the parallel universe of some province or other.

I lived in London throughout the late eighties and nineties until I was similarly forced out although for different reasons.

You should not confuse a consumer based economy in London with one from elsewhere in the UK. They are not remotely the same.

I'd recommend this post as a start

http://www.independent.co.uk/news/business/comment/darius-guppy-growth--it-aint-happening-2295967.html

I have said that because of the Blair years money printing policies we now have a 2 tier economy and this is true. What use is 'growth' if only a small proportion of the population make progress, whilst the rest languish in poverty akin to slavery.

For the large majority of people in this country the Blair years have caused the biggest depression in history.

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Terminator

Nov 14, 2012 at 12:26

@Geoff Downs you should perhaps also view

http://www.telegraph.co.uk/comment/personal-view/7273332/Darius-Guppy-our-world-balances-on-a-sea-of-debt.html

In my view Mr Guppy is a very clever man indeed and perhaps there is much more to him than meets the eye.

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Geoff Downs

Nov 14, 2012 at 12:33

The debt was created by the State borrowing and spending to much when times were good. The consumer debt was caused by bank lending and borrowing. The fake money being printed now is not getting into the real economy because banks are lending less and citizens are borrowing less.

Money printing has taken place since 2008, but apart from stock markets it's had little influence on economic issues.

When the so called economic good times were rolling, up to 2008, people were happy to go along with it. Now we have a slow unravelling of the boom.

Of course it is true that all sorts of people get caught up in the recession that is unfolding.

Anyway that's my view for what it's worth.

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Jonathan

Nov 14, 2012 at 13:14

Geoff Downs

If money being printed now is not getting into the real economy how do you account for the current high inflation? They actually also said in Zimbabwe that printing all that money wasn't the cause of inflation.

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Terminator

Nov 14, 2012 at 14:33

As someone who witnessed a relatively stable economic environment in the UK from the early eighties right through to 1997, with a minor blip around 1988 -90 I feel that during this time the majority of people could hold their own regardless of background and income, if you were poor but trying, you could even fail and bounce back to some form of respectability, although still unlikely to achieve the high levels of many. Since the money printing activities of the Blair years 97 -03 this has all changed and it is impossible especially if you are on the wrong side of 50. There is no chance for such people which is profoundly sad.

I know full well about the money printing activities in property because I used to do it !

Various events have caused me to changed my mind about this as I believe it is fundamentally wrong to manipulate property values in the manner which has been going on for the last 15 years in order to cream off and stash the 'profits' leaving millions of people enslaved into a rental sector they have no chance of getting out of.

97 -03 saw a 300% increase and enriched millions at a stroke with trillions in 'fake money' - I'm afraid no amount of persuasion from so called learned economists will change that.

People are accumulating such amounts of money they will never spend in umpteen generations.

This money has been sloshing around the 'economy' ever since, vastly distorting the real picture. Interest rates are permanently at near zero.

A complete reset is badly needed but won't happen because the politicians are some of the prime movers in this field and many who are not politicians who have interests in it. The situation has been exacerbated at an exponential rate since the Blair years and the expectation of £million PA salaries etc.

There is 'getting on' and there is 'getting on at the extreme expense of others' and without question the latter is the case.

Also, as I have said, the debacle brought about by the Blair government was engineered by capable people, not imbeciles, they are multi millionaires to a man, so was clearly intentional.I'll say that again in case anyone missed it, INTENTIONAL.

This begs a number of questions which no one seems to be asking and no one in any case has any replies to.

Of course many soldier on blindly as there is very little they can do about all this, it is totally out of their control.

I take the views of mathematician John Nash about the deliberate manipulation of money to be extremely valid and suspect unusual occurrences during Mr Nash's earlier life, which he will not be revealing.

I am not any kind of activist and a few comments on Citywire is about all you will hear from me as it becomes very tiresome hearing arguments from people who will never see a bigger picture than their own little high earning/achieving world.

Anyone who still thinks that things are fine, perhaps because they earning a large amount of money still, should check out

http://www.citywire.co.uk/money/unappealing-outlook-sustains-king-s-faith-in-qe/a634391?ref=citywire-money-latest-news-list

along with the other links posted further up the page

and should take a look outside their own personal financial bubble.

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Geoff Downs

Nov 14, 2012 at 14:42

I may be totally wrong, but I am not aware of money printing 97/03.

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Terminator

Nov 14, 2012 at 15:15

OK, that's all right then.

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Jonathan

Nov 14, 2012 at 15:17

Geoff, you are!

The BOE "prints" money (electronically) every year. It's the underlying way central banks control interest rates. It's the magnitude of QE that is the real difference. Printing money by the central banks can be looked at as another form of tax. Taxing people who have money by devaluing it.

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Geoff Downs

Nov 14, 2012 at 16:03

Johnathan,

QE, Is Central Banks buying financial assets from commercial banks and other private institutions, with newly created money, in order to inject a pre- determined quantity of money into the economy.

The usual policy of Government is the buying and selling of Government Bonds to keep market interest rates at specified target value.

Are we all happy with the difference?

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Terminator

Nov 14, 2012 at 16:15

@Geoff Downs its hardly a 'free' market then ? As I said, deliberate manipulation prevails.

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Geoff Downs

Nov 14, 2012 at 16:39

I have said a hundred times here that the boom was caused by low interest rates, bank lending and consumer borrowing. Interest rates have always been used by Government to deal with the economy.

Governments main motives are to deliver policies that get them elected, you won't change that.

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Terminator

Nov 14, 2012 at 17:09

As I have said, this time they f++++d it up so badly that it has actually removed interest rates completely, rendering them incapable of EVER being raised to more than 2-3% if that. They artificially enriched millions of people and created a 2 tier economy consisting of the superich and the rest who, in this area, are lucky to earn £200 PW.

' low interest rates, bank lending and consumer borrowing' so, again as I said, prices were artificially raised in order for many to cream off the 'profits' (not really there) and stash offshore.

Again, as I said Mr Downs, causing the biggest, longest and strangest depression in world history, strange because many people do not actually think that there is one, (those to whom the wealth was 'transfered') while others are stuck in some kind of 'non earning alternate eternal universe'.

We are going to have to wait until all those people actually die and leave estates in order to get it back, meanwhile the rest live in misery. I predict the damage is so bad that interest rates will never recover, so at least you can take that particular tool out of the box.

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Terminator

Nov 14, 2012 at 17:10

To reiterate Mr Downs, in the text above

' low interest rates, bank lending and consumer borrowing' so, again as I said, prices were artificially raised in order for many to cream off the 'profits' (not really there) and stash offshore.

This is the money printing which took place. A blind man can see this but you can't.

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Geoff Downs

Nov 14, 2012 at 17:36

Look I have given the definition of QE and the bond buying programme, so there's no real difference on that issue.

It is true we need to get away from boom and bust which has dogged our economy for many years.

We have to much debt, to little manufacturing industry, property prices are to high, there's to much regulation etc, etc,.

Government spending will have to come down and that will cause initial pain.

Regarding the wealth gap, it has always been there and maybe it is bigger today.

We have the choice of moving to a free market economy or a more regulated State controlled one.

I can't really say anything else.

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Terminator

Nov 14, 2012 at 17:58

'It is true we need to get away from boom and bust which has dogged our economy for many years.

We have to much debt, to little manufacturing industry, property prices are to high, there's to much regulation etc, etc,'

Well at least we agree on something !

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Jonathan

Nov 14, 2012 at 20:19

Geoff,

re "QE, Is Central Banks buying financial assets from commercial banks and other private institutions, with newly created money, in order to inject a pre- determined quantity of money into the economy"

Yes that's true, but you forgot to mention that over 95% of the financial assets bought by the BOE are government bonds and gilts. So it is the same.

What it actually amounts to is the government funding its debt by creating money and buying its own debt. They don't put it in quite that way. Have you ever wondered why? But then neither did Zimbabwe say it in that way.

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Geoff Downs

Nov 14, 2012 at 20:29

Jonathan,

On the inflation issue. The yields on Government bonds are signalling deflation.

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Jonathan

Nov 14, 2012 at 20:56

Geoff, Rubbish. The low yields on government bonds signals they are in demand in the market place hence their value goes up and thus their yield goes down. Did I forget to mention that the main buyer in the marketplace for these government bonds/gilts is just another arm of the government (aka The BOE).

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Geoff Downs

Nov 14, 2012 at 21:31

Investors in general are turning to Government bonds at a time when yields are at an all time low. This means those investors see deflation as likely outcome of this economic recession.

Rather than argue with you , suggest we wait a further period of time and then see what happens.

My advice to you is to look at Japan.

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Jonathan

Nov 14, 2012 at 21:49

Geoff what you have said in your last post is not the same as the previous post. Saying "the yield on government bonds is a signal of deflation" is TOTALLY different from saying "investors are turning to government bonds while yields are low".

Do you see that?

The fact that the yields are low is due solely to market demand for them by the BOE's QE program.

The fact that investors are turning to them when their yields are low is an indication investors think yields will stay low, i.e. the government (BOE) will continue their QE program. Low yields equals high prices with bonds. Also, they are not confident to risk investing what might be an overvalued stock market.

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Geoff Downs

Nov 14, 2012 at 22:29

If inflation was the threat due to QE investors would not go into Gilts. Rising inflation would trigger interest rate rises which would be very damaging to gilt investors. You yourself say gilt yields will stay low, not if inflation was looming.

You say demand is mainly from the B.O.E. There will be demand from pension schemes and of course banks as they are forced to hold more capital by regulators.

Look let's watch how it all unfolds, you may be right.

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Terminator

Nov 14, 2012 at 23:06

Its already unfolded, millions are without jobs, any source of viable income, any pension, any hope of ever owning a home, any hope whatsoever. Over 50s like myself are on the scrap heap and that doesn't even begin to relate my story. Meanwhile the elite play around with all the funny money and their property portfolios congratulating themselves on how well they have done over the last 15 years and continue to award themselves huge salaries, pensions etc. Its so bizarre its untrue. Utterly. utterly beyond belief. The biggest depression in world history and people are talking like it is a minor setback and things will get back to normal soon.

For 5 years now Mr King has been printing money like an arch counterfeiter, that is on top of the aforementioned mass property fraud of the Blair fake boom. He gets a pension of £300k, F+++ me pink !

People are finding that their money is worthless, they need to earn staggering amounts to stay afloat but are offered minimum wage at best. Not everyone is in the old boys club.

The poor are in the gutter with no hope of getting out while Nero plays with his fiddle.

TV and Publishing are filled with millionaire 'Celebrities' continually rammed down our throats and people think they are going to be like them, they are not.

It is well and truly f++++d for a lot of people, that is how it has unfolded.

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Geoff Downs

Nov 14, 2012 at 23:15

Other than that though it's not so bad!

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Jonathan

Nov 15, 2012 at 00:35

"If inflation was the threat due to QE investors would not go into Gilts".

If they can buy gilts from the BOE then sell them to the BOE at a higher price they might go into them for a short period. The reality is the BOE are the main buyers of bonds and gilts and a few pitiful people securing their pitiful annuities and of course bankers who are buying them and selling them at profit to the BOE.

"Rising inflation would trigger interest rate rises". I think we are going to see high inflation and low interest when the government is buying its own debt high inflation and low interest rates are what you get.

Watch is all plebs like us can do.

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Ian Lewthwaite

Nov 15, 2012 at 09:48

HI jeff DOWNA

the first bank to fail would have sent the correct, corrective signal to all the others, we would have had a severe slump then but this long death by a thousand cuts only prolongs the misery, unfortunately not for any of the people who should have lost all, pensions homes, yatchs villas etc. At least then we would have all been in the same boat , the poor will survive but I doubt if the Government would have even been alive. The old order changeth yeiding place to new- and it about time it came here, we missed the french revolution so old money still reigns in the UK - the balance between labour and capital has been manipulated too far out of balance, where money is now some peoples God, to the exclusion of their social duties and responsibilities

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Terminator

Nov 15, 2012 at 10:54

Even Citywire thinks it is just a minor blip

http://www.citywire.co.uk/money/thursday-papers-global-banks-told-to-cut-city-bonuses/a634698?re=21416&ea=288928&utm_source=BulkEmail_Money_Daily&utm_medium=BulkEmail_Money_Daily&utm_campaign=BulkEmail_Money_Daily

The truth is the whole deck of cards has been held up by the banks and their fractional reserve lending practices which escalated in 1997, starting with the manipulation of property prices, then escalating salaries on the 'strength' of that, leading to further 'investment' in a variety of enterprises for many of those who benefited from that painting a fictitious picture of the 'economy' . A complete smoke and mirrors act of unbelievable complexity since 1997. A crash is due much bigger than 1929 to put things remotely right.

The damage done is so huge that it will never really be put right, certainly not in my lifetime.

@Geoff Downs Yes, I suppose other than that its not so bad.

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Geoff Downs

Nov 15, 2012 at 11:50

"A crash is due much bigger than 1929."

It is almost certain a crash is coming, as big as 1929, who knows.

The crash may happen over a period of time rather than suddenly.

It may well be important in future to let failing banks fail. In 2008 it probably would have caused great danger to the economic well being of many.

The electorate wants politicians to deliver economic success, that's what they try and do, to get elected. I have never believed politicians actually make that much difference, we just suffer boom and bust cycles. Whoever is in power at the time gets either the credit or the blame.

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joe stalin

Nov 15, 2012 at 12:36

Look crash has been coming for the last 4 years but yet it has n't because central bankers etc know what is at stake. It is no ones interest to have banks fail no matter what. Clearly there appears to be little appetite at this ;oint in the cycle to persue those who were responsible for gaming the system which almost got us to teh edge of the abyss. It is also wrong to take what is hapening in the periphery as a proxi of what is going to befall the rest of us in time. We are dealing with arequired shift in attitude needed to change the balance of payments ie more people need to pay their fair share of taxes and the State role needs to be reduced so assets need to be privatised.This holds for Italy, Spain, Portual, Greece and so on. We need to see the dismantling of the Socialist wefare state as a concept. it is not popular but socialism simply does not work as people are finding out the hard way. As I have said before the diference between us and Greece is that there are some "wealthy" people in this country that do pay their taxes.So I don't think jor crash coming , but in case I am wrong I still have some cash I would like to put to work and I am certainly not alone. Corporates have worked on their balance sheets and are now well able to make more out of less. I went long in 2009 and have done little since I have to admit but because of that my returns have been good. If I had paid attention to the alarmist opinions at the time spouted by all and sundry I like many "professionals" would have been sitting on a pile of cash and having to write grovelling letters to my clients. Sure, things could be better they always can but a bit of a correction is not necessarily the harbinger of a global financial meltdown. Ironically the countries perceived to be at most risk are beginning to grasp the nettle. Lets hope our politicians and non elected self appointed guardian angels of the financial system can put their idiotic political agendas to one side and stop interfering in issues they simply do not understand. In the current climate scared cows are a liabilty.

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Geoff Downs

Nov 15, 2012 at 13:05

joe stalin,

Look you may be right. I see a slow decline rather than a sudden crash. People will make and lose money in stock markets, that's how it is. New money is always needed to pay the original investors. In the end a lot of people lose because they invest at the wrong time. Retail investors are at a disadvantage because amongst other things they are not privy to much of the inside information.

Success from 2009 is probably as a result of QE rather than fundamentals, which are pretty grim.

Each investor must weigh up his own circumstances. What you need to be careful of is listening to much to the investment industry who clearly have a vested interest in you putting money into the stock market.

My philosophy is that if something feels to good to be true, it probably is.

In the 1920's people lost most of their money, of course the potential for it to happen again is there.

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Terminator

Nov 15, 2012 at 14:18

@Mr Stalin You still, along with many, conveniently forget that pre 1997 the problems did not exist. You forget that the massaging of property values in order to create fake profits ala 1997 -2003 is for many people, the actual beginning of the problems. You forget that the using of these 'fake' profits to invest in other enterprises, is itself simply 'counterfeiting' at the very real expense of those not in on the activity.

I am aware that the wealthy people of the world choose to park their money here and I am aware of the reason why, quite possibly more so than yourself, I also don't need preaching to about socialism. Capitalism replaced slavery in this country over 200 years ago and has been on the go ever since, but in case you hadn't notice, modern thinking was supposed to have changed to the ideology that everyone was included in it, not just a few excessively privileged people.

I am also aware that there are things which go on and have been going on for a long time (hundreds of years) which aren't part of a typical economics curriculum, there is very little anyone will be doing about that.

I am not an activist, have no political axe to grind (waste of time, they are not actually in charge although they do handsomely reward themselves ) not subversive, I don't post anywhere online other than Citywire (why, I don't really know as I have no investments) have never begrudged anyone good fortune despite having none myself, I keep 99.999% of my observations to myself and do not attempt to incite opinion in others.

I would just like to point out that over the last 10 -15 years many have or are obtaining wealth by unfair means and, really, it stinks a bit.

That's it really.

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