Feb 03 2007
Response to the death of Prudence
The UK has had to pay much higher interest rates partly because this century the Chancellor has followed an imprudent course on spending and borrowing. The other main reason is the Chancellor’s decision to interfere with Bank independence, especially by switching to an easier target for inflation before the last election which threw the Bank’s counter inflation strategy.
John Redwood has been the Member of Parliament for Wokingham since 1987. First attending Kent College, Canterbury, he graduated from Magdalen College...
I was talking about interest rates and inflation with my 62 year old retired Father the other day. He tells me that inflation was a godsend, within a few years the value of his mortgage in comparison to his salary had diminished leaving him with more disposable income and more immune to interest rate rises.
I’m a 26 year old recent graduate who is completely priced out of any property worth buying. I’m not daft enough to buy any old dump during what might be a peak in the market and the beginning of an era of higher interest rates. My pay rises are linked to inflation and higher interest rates are more likely to cool off (or even bring down) the property market.
So surely high inflation / interest rates for a few years will benefit me?
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Milton Friedman described inflation as a narcotic. When you first take it, you feel great, but later the effects catch up with you and you feel terrible. The only way to avoid the negative effects is ever increasing doses of inflation. Before you know, you’re a crackhead.
Inflation: Just say no!
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