Somehow, under this government, I think it will.

Could a question be asked of the Tranport Ministry, or the Treasury as to what will happen to this 2p increase.. will it be removed ?

Thanks

David

What a mess.

David

Throw the election. Let the country go to the dogs under a Labour Govt. (Our fortunes can’t be changed now anyway)

Peter Schiff for example has been predicting $4,000 dollars an ounce on various youtube posts. This seems at the pessimistic end, but he was right on the money before.

If you are expecting rampant inflation then Gold even at these prices should be a good investment, no? You subscribe to the doctrine that gold is a hedge against inflation?

If you had bought gold at the end of 1968 you would have paid £17 per ounce. Today as everyone knows you will pay £681 per oz.

Problem for gold is that is is an asset as such it will have a variable price depending on demand.

Credit is collapsing and gold in increasing in value, a coincidence? I think not.

Steve Cox: “FTSE looks set for a fall, ”

I believe QE is responsible for the rise in the stock market and the rebound in house prices – once again it is hardly surprising that with the government stuffed to the gunnels with property speculators – subsidised by the tax payer – they have done as much as they can to permit them to offload their properties without a significant loss.

Steve Cox: ” locking money up long-term at 5% or so would at least avoid erosion of your savings base, as long as inflation doesn’t go above 5% – and who would bet on that?”

The purpose of QE is two fold. To flood the economy with extra liquidity and encourage people to borrow thus stimulate production.

That is a stupid policy for an economy so dependent on imports as ours is, but it isn’t working anyway.

The banks aren’t lending, in fact they are cutting back on lending. They don’t know who to lend to with out risk of loss.

The second purpose is predicated on the success of the first which is to buy the coming election.

As to interests rates, have you noticed you can’t get a loan for less than 6%? The banks are minting, they pay no attention to the base rate when lending money, but are scrupulous to adhere to the base rate when borrowing themselves.

Two other things.

First, it’s more dangerous (in the UK) coming out of recession than going into it – because inflation means higher mortgages and in the UK we are over mortgaged. Going into a recessin is eay – just shut your eyes.

Inflation will be imported this time around. Food, fuel, raw materials, large physical goods, outsourced labour etc, will all go up in price. The only thing we can do about it is to supress demand using high interest rates because we can’t control their price.

Our relative global standard of living will fall – either via global inflation or via high interest rates.

Dear Gordon

What did you expect? And anyway, isn’t this really what you wanted? How else do you imagine you will ever pay these debts? Are you going to turn around to the voters and say “Sorry taxes are now going up on ‘hard-working-families’ and we will have will major spending cuts because the Chinese need their money back” Of course you’re not. Do you really want me to turn off the presses bearing in mind they now fund fully a third of your spending? No, thought not.

Yours

Merv,

(bcc David Cameron)

Now here’s the big shock that’s coming next. As inflation continues to rise over the coming 12 months, the BoE will maintain a zero interest rate policy, in spite of its 2% CPI target. They will find various fudges and excuses to do this, such as the current increases in inflation being caused by one-off events such as the VAT change. So savers will find that with inflation at perhaps 5% and rising, and interest rates close to nothing, the government will in effect be stealing 5% of their savings each year.

What can Joe Sixpack do to avoid this? Gold is way overvalued, the FTSE looks set for a fall, locking money up long-term at 5% or so would at least avoid erosion of your savings base, as long as inflation doesn’t go above 5% – and who would bet on that? The only way out of this is to take the exchange rate hit and get into a currency with a future. Australian dollar accounts are paying a reasonable rate of interest, and long-term their economic outlook is far, far brighter than Britistan’s. Even the overvalues Euro is a better haven for your savings, as the Germans will never allow inflation to take off in the casual manner that British authorities seem happy to accept (or even encourage).

Inflation is state-sponsored theft, pure and simple. Only incompetent economists (who seem to be a large majority these days, but they’re not alone, look at the folly of the warmists) truly believe that a positive inflation rate is beneficial. The British government and its central bank wish to steal your savings. Therefore get your savings out of Sterling before they reimpose capital controls.

Transport costs are heavily dependent on fuel costs.

Fuel costs are directly dependent on Excise duty and VAT which accounts for 90% of the cost of a gallon of fuel.

Government has and is driving up the price of transport.

JR: “Air fares, DVDs, computer and other games and telephone charges all rose. So too did meat, vegetables, bread and cereals.”

Fuel costs comprise a significant proportion of the cost of all these things. They all have to be transported to the point of sale.

On top of that don’t forget Airport tax, which has driven up the cost of air transport. What about the so called ‘green’ taxes?

None of those have driven the price of travel down!

The truth is we are in a period of deflation and the government is using that as a opportunity to raise taxes.

I rather suspect the idea is since inflation devalues debt and the government debts are out of hand, a few of years of 30% inflation will erode them nicely and it might also provide a cover for Euro entry.

An odd phenomena – you still see economists on TV saying that since the economy is still in recession, you won’t see serious inflation, did these people not live through the 1970’s?

By the way, can anyone tell me what the Beeb’s favoured economist Vince Cable now thinks of QE, as I have rather lost track of his latest position ?

The first unlooked for result is that the inflation spiral will kick in before the election.

At a slight tangent one of the problems with assessing economic data in the past ten years is that it has become compromised by spin, timing and blatant omissions ( I suppose the same aplies to all government statistics especially from the Home Office). Does the Tory party have any policy on making statistics production more transparent and independent?

Post election – assuming the Tories win – Labour will be blaming the Conservatives for letting inflation take off and will say it is a repeat of the ’80s – when Mrs Thatcher was dealing with the consequences of the last round of Labour Government failures.

In the case of the UK the enormous Government debts need to be paid off. We can either do this by cutting spending or by raising taxes. I figure about 20% cuts are needed. BUT if we can’t swallow these cuts then inflation rates, interest rates and exchange rates will find a way of reducing the value of Labours Debt Mountain – BUT they will also reduce our own personal wealth relative to other countries.

Raising VAT on New Years Day will be an administrative nightmare. When the retailers will be desperately hoping that we all buy shed loads of VAT rated items in the sales the tax on those items will rise by 2.5% thus depressing demand & fueling inflation.As weak demand & higher inflation are bad things at the best of times it seems mad to worsen things during a recession.

It is mad to impose an extra load of complexity at a time when retail prices are in a state of flux.Big companies like M&S can just absorb the admin cost of thus,shrug their shoulders and move on.For small companies it is yet more complexity at a time when many are suffering recession induced falls in demand for their goods & services, excess red tape and a lack of credit.

Keeping VAT at 15% for a few months thus giving companies time to adjust over a longer time frame would make it easier and it would avoid depressing demand when retailers need sales to be high (i.e. during the sales of January & February).