Author Topic: Why all government need and want inflation  (Read 6176 times)

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The Prophet

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Why all government need and want inflation
« on: February 14, 2015, 07:42:01 am »
No country in the world can afford to pay off its debts with real money, so the only option will be to default. There are different ways a nation can default. 
It can say, "we will never pay you" -Argentina style.
Or say, "we will pay you back a little later and a little less" - a Greek "haircut" style.
Or they can default on their own citizens and call it "austerity".
But all three are politically unattractive.
The best way is the one government always chooses - inflation the debtor's friend.

Those of you reading this thought the Bank of England target for inflation of 2% was a maximum.  The reality it is also a minimum.
No government wants deflation, as their debts stay large in real money terms.  This is why are politicians talking up pay rises for workers "Britain deserves a pay rise" 
If it gets one, everything will be more expensive, workers won't be any better off but the value of the nation's debt pile, doubled by this coalition, will reduce due to the inflation created.

But you cannot have just the right amount of inflation. 'Goldilocks' inflation does not exist.
Inflation is not an animal you can tame and control.
Once inflation is unleashed the outcome cannot be controlled.
Won't happen here in the UK?  Inflation in Russia is running at 17%, in Argentina it is 23%. 

In 1967, Harold Wilson devalued the Pound by 14% claiming it would tackle the "root cause" of Britain's economic problems after Labour "inherited" an £800million deficit from the Conservatives. Sound familiar?
Wilson said at the time "It does not mean that the pound here in Britain, in your pocket or purse or in your bank, has been devalued."
Really?  What followed was 25% inflation in 1974. 
Quantitative Easing is the same dog with different fleas!

Low interest rates and inflation are robbing savers of their hard-earned wealth.
The central bank's government-approved policies are allowing this to happen