Coming Soon : Double Digit Inflation

If you haven’t got any gold, stock up on baked beans, because inflation is coming back.  Data released this morning from the Office for National Statistics showed inflation in the UK rose for the second month in succession to 1.9% in November, jumping from 1.5% in October. This rise in inflation is far stronger than consensus economists were expecting.  Guido will bet a large amount of money that the Governor of the Bank of England will have to write to Chancellor Osborne next year telling him why inflation is over-shooting target.

Not hard to figure out why when the government has printed the money to buy all the billions in government gilts offered this year. Take that in, the net effect of printing all that money via quantitative easing was to prop up the government’s debts.  Andrew Lilico at Policy Exchange is equally as pessimistic as Guido, he is predicting 2 quarters of anemic growth, followed by 2 quarters of contraction next year and double digit inflation to follow by early 2012 – a double dip. Double digit inflation and probably a recession in 2013 – stagflation.

Lilico calls the failure of Darling to use the PBR to tackle the deficit sooner rather than later a “nihilist fiscal policy”.  There has been some argument made by left-wingers that the ‘AAA’ rating is not really under threat and that it is just political scaremongering by George Osborne to claim otherwise.  The fact is that the markets have already removed the triple ‘A’ rating before the ratings agencies.  In terms of the interest rate paid and implied risk premium for UK debt, gilts trade like double ‘A’ countries – Japan, Portugal, Ireland – rather than triple ‘A’ countries like Germany.  As a result, the cost of servicing UK debt is already 20% higher* than it is for Germany despite £200 billion having been thrown at keeping short-term rates down, not surprising when the UK leads the G20 in having the highest inflation and worst indebtedness.

See also : Yo Dude, Where’s the Deflation?, Bank of England Pension Fund Surges Betting on Inflation, Double Digit Inflation is a Black Swan.

*Market rates today for UK 10 year gilts 3.90% against 3.24% for German 10 year bunds.



Tip offs: 0709 284 0531
team@Order-order.com

Quote of the Day

Liam Fox shreds Cameron’s Calais scaremongering:

“Sad and disappointed to see our Prime Minister stoop to this level of scaremongering, especially as he knows the Calais agreement is nothing to do with the EU and agreed between the two govts”

Top Posts This Week

Guidogram: Sign up

Subscribe to the most succinct 7 days a week daily email read by thousands of Westminster insiders.

Facebook

Squandermania: Roof Not Fixed Squandermania: Roof Not Fixed
OSBORNE’S BROTHER STRUCK OFF: READ RULING, THREATENING EMAILS OSBORNE’S BROTHER STRUCK OFF: READ RULING, THREATENING EMAILS
HAPPY AS LARRY: SANDERS NEW GREEN PARTY SPOKESPERSON HAPPY AS LARRY: SANDERS NEW GREEN PARTY SPOKESPERSON
LABOUR CAMPAIGN CHIEF: “WE HAD NO STRATEGY” LABOUR CAMPAIGN CHIEF: “WE HAD NO STRATEGY”
CLEGG’S ASTRONOMICAL SPAD BILL HYPOCRISY CLEGG’S ASTRONOMICAL SPAD BILL HYPOCRISY
STRICTLY CYMRU DANCING: LEANNE WOOD’S WONDERFUL WALTZ STRICTLY CYMRU DANCING: LEANNE WOOD’S WONDERFUL WALTZ
LEAVE AHEAD WITH ICM LEAVE AHEAD WITH ICM
HAPPY ‘I HEART UNIONS’ DAY HAPPY ‘I HEART UNIONS’ DAY
CORBYN WEARS SPONSORS’ BADGE CORBYN WEARS SPONSORS’ BADGE
Open Minded Herbert’s Made His Mind Up Open Minded Herbert’s Made His Mind Up
Amazon’s Lawyers Prepare for Zombie Apocalypse Amazon’s Lawyers Prepare for Zombie Apocalypse
PMQs (Rap Version) PMQs (Rap Version)
Top Europhile Defects to Out Campaign Top Europhile Defects to Out Campaign
BARROSO: BRAKE WON’T PUT OFF MIGRANTS BARROSO: BRAKE WON’T PUT OFF MIGRANTS
PESTON OUT OF THE LOOP PESTON OUT OF THE LOOP
LABOUR’S CONSISTENT FLIP-FLOPPING ON SURVEILLANCE LABOUR’S CONSISTENT FLIP-FLOPPING ON SURVEILLANCE
UBER TRIES TO KILL HAILO UBER TRIES TO KILL HAILO
CALAMITY CORBYN’S COMICAL CAMPAIGN COCK-UP CALAMITY CORBYN’S COMICAL CAMPAIGN COCK-UP
PARLIAMENTARY PANCAKE RACE (INSERT MANDATORY TOSSER JOKE HERE) PARLIAMENTARY PANCAKE RACE (INSERT MANDATORY TOSSER JOKE HERE)
SADIQ LOSES IT WITH BBC JOURNALIST OVER TFL FARES SUMS SADIQ LOSES IT WITH BBC JOURNALIST OVER TFL FARES SUMS
FRENCH GOVERNMENT DISPUTES CAMERON ON CALAIS FRENCH GOVERNMENT DISPUTES CAMERON ON CALAIS
EX-LABOUR MINISTER COMES OUT FOR BREXIT EX-LABOUR MINISTER COMES OUT FOR BREXIT
EU GOING TO PAY FOR THAT? EU GOING TO PAY FOR THAT?
TORY MPS PAN CAM’S CALAIS SCAREMONGERING TORY MPS PAN CAM’S CALAIS SCAREMONGERING
LEAK: LANSMAN MOCKS “CLUELESS” UNITE CHIEF LEAK: LANSMAN MOCKS “CLUELESS” UNITE CHIEF
CARSWELL: “NOT GOING TO CRITICISE FELLOW EUROSCEPTICS” CARSWELL: “NOT GOING TO CRITICISE FELLOW EUROSCEPTICS”
SUNNY DAYS AHEAD FOR SCRAPBOOK SUNNY DAYS AHEAD FOR SCRAPBOOK
HOW MANY MPS DOES IT TAKE TO CHANGE A SOAP DISPENSER? HOW MANY MPS DOES IT TAKE TO CHANGE A SOAP DISPENSER?
KEN PREDICTS MCDONNELL WILL BE NEXT LABOUR LEADER KEN PREDICTS MCDONNELL WILL BE NEXT LABOUR LEADER
Don’t Criticise Fellow Brexiteers Don’t Criticise Fellow Brexiteers