It is pretty extraordinary for the Governor to feel it necessary to issue such a bald warming to a sitting Government:
"I'm sure the government will want to be cautious in this respect," he said. "There is no doubt we are facing very large fiscal deficits over the next two to three years.
"Given how big those deficits are, I think it would be sensible to be cautious about going further in using discretionary measures to expand the size of those deficits.
"The level of the fiscal position in the UK is not one that would say: 'Well, why don't we just engage in another significant round of fiscal expansion?'"
One thing which surprises me is that many 'experts' did not see the rise in UK inflation coming; the currency has slid 30 per cent in the last year and we import a great deal of our food. What's to be surprised about? The fact that mortgages have become much cheaper for those that [already] have them is fine - and indeed many people I have spoken to in recent months, whose employment is with the State in one form or another (teachers, civil servants, police, etc) are quite happy with the current situation, having seen their monthly outgoings fall substantially whilst largely continuing to enjoy very secure employment, but the situation is quite different in the diminishing private sector where few can be absolutely sure they will still have a job in a few months time. As for those who do not have mortgages (and that includes not just homeowners, but people who rent privately or are council or housing association tenants), they are fully exposed to the increased inflation of [officially] 3.2 per cent - undoubtedly much higher when only basic essentials such as food and heating/energy are considered, whilst similarly those amongst them who have savings are painfully aware that their cash deposits and other investments are quite literally a wasting asset with the twin perils of low interest rates and inflation eating into their values.
I think, even now, most people have no inkling of how bad things could get in the next few years for so many of us who have grown complacent over the recent decades of relative plenty in western societies. I'm afraid I've been thinking these thoughts for at least the past four or five years and it gives me absolutely no pleasure at all to see my worst fears beginning to become reality - and we are only just at the start of a very frightening process in my view. The UK and many western countries are going to be much different (and diminished) places in a decade or two and it's going to be a bumpy ride getting there.