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By Pete Moore On October 18th, 2011

Feeling poor enough yet?

The Office for National Statistics has announced that (price) inflation hit 5.2 per cent in September. Demonstrating true economic misunderstanding, The Telegraph reports: “Inflation jumped to a 19-year high of 5.2pc in September driven by higher energy prices, underlining the squeeze on living standards and landing the Government with a bumper bill for increased state benefits.”

Ladies and gentleman, this is Economic Commissar Mervyn King’s fix, and it’s in. He’s been warning of (price) deflation for three years, as if falling prices are a bad thing for most of us, while the Austrians warned against revving up prices by printing money. Well price inflation continues to intensify and it’s only going to get worse, meaning we are becoming poorer more quickly.

The Telegraph fails to see that if higher energy prices alone were pushing price inflation higher then prices of other goods and services must fall as we direct more of our income to energy bills. Since prices are rising across the board we can say that King’s attempts to inflate prices are a rip-roaring success.

Says Bob Wenzel: “Only an understanding of money flows and its impact on the economy, something only understood by Austrian economists, can explain what is going on now. Note to Keynesians: The price inflation is going to get much worse”

The forecast is for “experts” to remain surprised.

11 Responses to “(PRICE) INFLATION AT 19-YEAR HIGH”

  1. Was not Mervyn King and the Bank of England charged with combating inflation? Even I could have told them that printing money was a sure route to ensuring that inflation flourished. Now, while inflation flourishes, the Bank of England, The Prime Minister, the Deputy Prime Minister and the former Government (they introduced the policy) seem to think that interest rates should be held artificially low at 0.5%. Surely this is madness.

  2. Agreed. Well done Mervyn.

  3. Peter T –

    In the last couple of weeks both Cameron and Osborne have boasted of the success of an economic policy which has kept interest rates at 0.5%.

    The mind boggles.

  4. Ecomomics is a fraudulent subject and is entirely owned by the clique who own the banks. Take for example the manner in which the entire body of economists in the UK and US declared a few years ago that “trade deficits don’t matter”. Anybody with real knowledge knew that the statement was wrong, utterly wrong.

    Take a look at the syllabus of economics as taught in universities. I’ll wager that fractional reserve banking, or more particularly, the inflationary consequences of fractional; reserve banking, is not one of the major subjects. Neither would be the creation and control of money and charging at interest.

  5. A story I read earlier today while in the local hospital waiting room, which rather puzzled me.

    A printing company was bemoaning the fact that they couldn’t get a loan from their bank for new machinery, – to keep up with the competition from the ‘continent’. The political loudmouth they were moaning to, promised all sorts of new rules and regulations to correct this churlish, and greedy behaviour by ‘the bank’, and others who refuse loans to honest, hardworking entrepreneurs.

    A few details about the company followed, – that they had four factories and employed many people, and had been in business for some thirty odd years, and were in good standing with the bank. So far so good!

    The loan in question was for a million pounds, – certainly not pocket change. Which made me wonder, just what sort of ‘business men’ the owners were, – on the details provided, they appeared to be rank amateurs, and after thirty years ‘in the game’, seem not to know the basic principles of running a whelk stall, let alone a ‘four factory’ enterprise.

    Surely once a new company becomes established one of the prime aims is to ensure its longevity, and to keep a healthy new investment cum replacement account helps toward that end. Such a provision for future expenditure takes priority over dividend payemnts and Directors expense accounts.

    This slap happy lending by the banks and others is exactly why we are in our current, highly indebted position. Easy borrowing means the banks take the risk, and ultimately the taxpayer, when the borrowers default. Which is why banks should not be ‘bailed out’. By all means protect depositors, but shareholders should not expect the same treatment.

    Whether it was the Banks or the government which triggered the uncontrollable waterfall of easy credit, is a very moot point, hard to tell who benfitted most in the short term.

    Whether it be for a home or a business, one of the criteria for a loan has to be the risk involved. If a company, as mentioned above cannot finance the bulk of replacement equipment, then that alone is enough to signal that the company has a higher risk factor than might ortherwise be the case. The Banks don’t, or shouldn’t make loans against third-rate collateral.

    In the current situation, just what did the prospective borrowers expect, – no doubt a low interest rate, which even then they would probably have difficulty in repaying, as their record suggests that they are either addicted to profligacy, or just plainly incompetent as managers.

    Should the Banks be pressured into making substandard loans by a government that believes that a private enterprise can be run in the same manner as a governmennt that can inflate its debt away by QE, and other devious scams, – most emphatically – no!

  6. Easy lending is, of course linked to the ‘fractional reserve’ banking system, and would not have been possible if the legislation had not been changed – back in the 1970’s – not at the insistence of the financial institutions, but as a political boost to national and global investment, with intention of making business more competitive, and has as usual, had dire unintentional consequences. All it did was to make scamming and conning that much easier!

  7. Did anybody here receive lectures in economics whilst at Uni or similar tertiary education? What was in the syllabus?

    What I did during engineering wasn’t what I’d call economics although it dealt with rates of return, profit/loss, management accounting etc. What was taught in the Universities about banking and money?

  8. Allan@Aberdeen –

    I changed course after the first year of an economics degree.

    It was all econometrics – all maths, graphs and answers longer than the questions. I chose economics to learn economics. Instead it was all piffle. It’s econometrics which turned a study of human action into a supposed science and which plagues economics. It makes economists think they can manage economies. The sooner it is wholly discredited the better.

  9. Didn’t a couple of the Austrians here make predictions of hyperinflation in 2008 and 2009?

    Wha happen?

    Since even 5.2% isn’t remotely close to hyperinflation. Better get Al Gore to help you with your ” models “!!

  10. 5.2% inflation? Phantom believes that figure because it is issued by the government, the source of all truth. However, people who are outside Whitehall and ‘The City’ don’t believe that figure because it’s a lie. Inflation of food prices, fuel, domestic energy are way above 5.2%. It is good that the government fiddles the figures in such an obvious manner as it awakens people to the fantasy world of government.

  11. Some things are up this year, some things are down.

    You guys predicted wild hyperinflation three years ago, and there is no sign of it.

    The forecast is for “experts” to remain surprised. Yes indeedy.