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Run Away UK Inflation


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It is still a wonder to me that Central banks do NOT get it, and perhaps industry.

Yes, wage increase pressures are present. That SHOULD BE EXPECTED.

Yes, companies have reasons to increase their prices. That too IS EXPECTERD.

WHY?

PRIMARY FACT: Central Banks have FAILED TO CONTROL INFLATION. THERE IS NO GETTING AROUND IT WITH JUSTIFICATIONS.

Taking up various "toxic debts" of banks and companies does not solve excess money printing (now called QE). This only transfer's somebody else's debts onto the government side with no exchange in return, and then getting general bond holders to pay part of it by charging negative interest rates. The culprits who CAUSED THE TOXIC DEBITS go scotch free and it encourages them to maintain such bad practices. It is ODD no central banker thinks of things like this that is SO important. So remind me, what are they professional in?

Governments are supposed to take care of the general population's financial welfare, not private industries.

Handle the excess money printing, you handle the inflation. Interest rates having to shoot up is a sign of past mishandlings, e.g., using ultra low interest rates ever so long incorrectly. It IS because of this that purchasing power of the currency is lost. It is BECAUSE OF THIS that individual wages and price increases need to take place, rightly, to keep up with the increase of the cost of living. Yet governments and central banks worry about wage increases and price increases as a menace. And they try to limit wage increase. Price increases occur but then their customers cut-back on spending as they cannot afford as much. This IS AN INVERSION in thinking by officials. It develops a vicious circle. The primary source of the problem is out of mind, yet it has been so well known for decades. SIMPLE BASICS ARE NEGLECTED, OR JUST MISUNDERSTOOD.

THIS APPLIES TO ALL CENTRAL BANKS, who seem to be copying each other in actions.

Mervyn King, ex-UK central bank chief seems to be the only one who has some understanding on the problems of central bankers.

It is understandable the the BoE wishes not to head into recession or reduce significantly the GDP by attempting to control interest rate increase. But that is misguided in my opinion.

WHY?

Rates level manage the Macro-economics, loans, savings and mortgages level control.

It is the individual company's operating condition that is neglected. Each company may be responsible for it but they (some) can act poorly, cut corners, use creative accounting, unethical practices, no cash flow, huge debts, not growing organically, non-profitable, taking too huge a risk, etc... IT IS THIS AT THE MICRO-ECONOMIC LEVEL THAT THE HEALTH OF BUSINESSES ARE NOT GUIDED. When a plane is in operation, takes off and fly's it is in good hands, with good control. When "things" go wrong and the plane is out of control we have bad control (for whatever the reason). Similarly the ECONOMY IS IN BAD CONTROL . Governments and bankers think Marco economics will "solve" everything  --  it comes out in the way they operate. Letting companies borrow until they have the highest debts ever in history is just one sign of 'bad control'.

No banker would over loan a household individual more than he / she can pay back. And oh, they are always made to be paid back. Individual companies can over burden themselves with huge debts yet continue as nothing is wrong, no alarms, no worries. That is, until some economic trigger brings it down and cause an expected domino-effect. But bankers are clever there are government subsides, tax-relief, and transfer toxic debts relief plans in existence, then "all should be well"!!!! REALLY? HISTORY TEACHES US DIFFERENTLY. WHAT IS WRONG?

For one, you make the taxpayer pay for others loans, costs, expanses, etc... call it what you will. So industry does not pay its own way as a private industry.  Industry then goes back to the same old bad practices. Then, later, they wonder why the average GDP now is not as good as prior to previous recession!!!!! HEY, HAVE YOU NOT REALISED THAT YOU CHOCKED OFF THE BASIC FOUNDATION THAT INVESTING IS BASED ON.   -----   SAVERS AND INVESTORS.

The thinking is something like this:

No, we  have to have these existing plans. WE GOT TO KEEP SAVERS SPENDING, SPENDING SPENDING ANY WHICH WAY WE CAN FORCE THEM. WHY, IT IS THE DEBTS WE BUILD-UP  -- IT IS TOO MUCH AND HAVE TO PAY THEM OFF SOMEHOW -  WE GOT TO MAKE THEM PAY....... AND GROW THE ECONOMY OUT OF THIS MESS. BESIDES BANKERS WANT THEIR LOANS PAID, AFTER THEY COLLECTED HUGE INTEREST PAYMENTS OVER A LONG PERIOD, AND SO ADVICE GOVERNMENT HOW TO "SOLVE IT".

After all these years we are no better off. And all end up suffering. The western countries, at least, are living beyond their means. THIS IS THE DWINDLING SPIRAL. IT HAPPENS OVERS DECADES.

 

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