Today it has been revealed that there has been an 'unexpected' rise in inflation. Unexpected by whom? Certainly not by me! And in my view this is merely the beginning of what will be a VERY difficult period, probably several years in length, when real values are going to be savagely eroded. I'd like to believe the underlying not-too-terrifying (i.e. a very different thing from being in any way 'optimistic') message which this Bloomberg article postulates, but I'm afraid I really don't.
As I have written here before, none of this is accidental - it is the whole purpose and and planned-for result of the mad policy of 'quantitative easing' that our mad Labour Prime Minister, Chancellor of the Excehquer and Government has been championning for the last 18 months or so as the coup de grâce to follow on from the reckless borrowing they have been indulging in since they came to power in 1997 to fund their redistributional policies and various kinds of credits in order too buy the loyalty of their increasing client state, not to mention the deliberate sabotaging of one of the soundest private pension industries in Europe and probably the world. This is the only way that individual and national debt can be reduced to less-dramatic proportions, given that neither Labour nor indeed the Conservatives seem prepared to confront the fact that public spending needs to be slashed much more severely than either is prepared publically to suggest is required, for fear of the electoral consequences one presumes. If you work for the 'State' the effects have been quite different - because, let's face it your salaries and pensions are paid by the taxes and skills of the productive part of the economy and if that part of the economy fails to keep up the payments, well then the 'State' has the law and all that backs it up on its side to force the issue. Private sector pensions have mostly been destroyed for anyone under 50 and for many over that age and nearing retirement age the effects of Labour's spiteful policies have either left them with a heavily-reduced pension or none at all. In contrast, this April Basic State pensions are likely to increase by about 2.5 per cent (just in time for the General Election), whereas anyone receiving a pension not from the public payroll is likely to receive (to borrow a phrase from our illustrious [not] Prime Minister) a "0 per cent increase", if they are lucky - some will probably be awarded a 'negative increase' - boom, boom! See, I haven't lost my sense of humour entirely, even if it is of the gallows variety!
Well, now the chickens are beginning to come home to roost.
Naturally enough politicians from the Labour Party (and shamingly from the Conservative Party too) will be attempting to promise the majority of the electorate that they will be 'protected'. Stuff and nonsense.; Inflation is going to destroy a lot of lives in the next decade, just as it did in the 1960s and 1970s. And just who do you think caused the problem then? Why Labour of course, which was in power for most of those two decades (1963-1970 and 1974-1979)!
It's going to take a Conservative government many years (assuming they are elected in May/June this year) to begin to sort the problem out, but the folly and myopia of the British electorate must never be underestimated. It took the Thatcher/Major governments almost 20 years to put the UK economy back on a sound footing and it was painful and ended up by leaving them deeply unpopular amongst a majority of British people, who fell for the old Labour lies once more and elected them in 1997, since when Labour has succeeded only in reversing, in spades, most of the gains the Conservatives had so painfully coaxed the British public into accepting.
It gives me no pleasure at all, indeed I am filled with considerable apprehension, when I write - I told you so!
For perspective, a few articles from this blog from the past few years:
18 June 2005 - We're all doomed ... at least potentially ... no, seriously!
16 August 2007 - Investment markets - to stay in or to sell...
16 July 2008 - The financial 'crisis' - to blog or not to blog
16 September 2008 - Bill's off again ... back to Spain (the title is relevant, trust me!)
30 October 2008 - What's really going on in the economy
10 November 2008 - Interest rates cut. Tax to be cut? Borrowing to go up?
15 December 2008 - Far from alone
28 February 2009 - The inflationary bubble that is being constructed
2 April 2009 - G20 result in summary - 'global quantitative easing'
1 July 2009 - Mr Gordon "0% increase" Brown
8 September 2009 - Labour forced to come clean over budget deficits