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

GuidoFawkes Quote of the Day

Tim Shipman to Adam Boulton on the TV debates…

“If Cameron gets in a car to go to the debate, Lynton Crosby will stage a car crash.”

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

NHS ADMIT MEDICAL RECORDS ARE NOT SAFE NHS ADMIT MEDICAL RECORDS ARE NOT SAFE
Today’s PMQs SKETCH: A New Low Today’s PMQs SKETCH: A New Low
Yet Another Mainstream Media UKIP Smear Yet Another Mainstream Media UKIP Smear
HANDS ON WITH THE NEW SINCLAIR ZX SPECTRUM HANDS ON WITH THE NEW SINCLAIR ZX SPECTRUM
Typical Trade Union Drivers Typical Trade Union Drivers
Labour MP in Misuse of Taxpayer Cash Row Labour MP in Misuse of Taxpayer Cash Row

BOFFINS: CLIMATE CHANGE CAUSED ISIS BOFFINS: CLIMATE CHANGE CAUSED ISIS
Mystery of Massive Miliband Mystery of Massive Miliband
Cameron With a Gun to His Head Cameron With a Gun to His Head
Save the Children Sorry For Blair Award Save the Children Sorry For Blair Award
Another NHS Hospital Shamed Another NHS Hospital Shamed
Widespread and Habitual Hacking at the Mirror Widespread and Habitual Hacking at the Mirror
Will Straw Silent on Sleaze Will Straw Silent on Sleaze
When Dave Met Walliams When Dave Met Walliams
Home Office: Nerdy Kids are Dangerous Home Office: Nerdy Kids are Dangerous
Jim Murphy Is Laughing At You Jim Murphy Is Laughing At You
Awesome Star Wars Tie Fighter Drone Awesome Star Wars Tie Fighter Drone
Labour Select Palestine Activist to Fight Galloway Labour Select Palestine Activist to Fight Galloway
Follow

Get every new post delivered to your Inbox.

Join 1,816 other followers