Nouriel Roubini tells the FT…

“Until last year policymakers could always produce a new rabbit from their hat to trigger asset reflation and economic recovery. Zero policy rates, QE1, QE2, credit easing, fiscal stimulus, ring-fencing, liquidity provision to the tune of trillions of dollars and bailing out banks and financial institutions – all have been tried. But now we have run out of rabbits to reveal.”

Only Believe in Gold

The inevitable is now in process, policy makers are not going to be able to avert inflation and economic retrenchment, markets are starting to recognise reality. The credit of the United States has been downgraded, the euro is in a death spiral, nations teeter on the brink of bankruptcy. Power and wealth are shifting eastwards on a tectonic scale. Ever since the 2008 credit crisis and the doomed attempt by central bankers to solve the underlying debt crisis with more debt and inflation. All predictable, in the case of the euro almost every eurosceptic from John Redwood to Nigel Farage predicted it down to even the exact catalyst – Greece – a decade ago.

Step forward Andrew, Lilico formerly at Policy Exchange, who is equally as pessimistic as Guido, as long ago as 2009 he predicted a double dip with“double digit inflation and probably a recession in 2013 – stagflation.”

At the same time Guido argued that

Mervyn King even talks about the threat from deflation – Guido sees that merely as an excuse to justify printing even more money via quantitative easing (QE). QE means inflation is inevitable. 

Get your wheelbarrows out, stock up on gold and baked beans. If you can, buy a productive asset, like farm land – it is an inflation hedge and you won’t go hungry. 

Here comes inflation – as it always does when governments turn on the printing presses…

Guido wrote in 2008

“holding gold will be insurance as much as an investment. If you have apocalyptic fears, holding physical gold coins is reassuring.

In 2009 Guido marked the

“symbolic of the end of the twentieth century Anglo-American dominance of the world” with “the purchase by the Indian Central Bank of  200 tonnes of gold from the IMF.  The Indian Central Bank paid an average of $1040 per ounce.”

Mr & Mrs David & Maureen Somers must be doing pretty well now.

Told you so…

See also : The Bank of England’s Great Inflation SwindleComing Soon : Double Digit InflationDouble Digit Inflation is a Black SwanBank of England Pension Fund Surges Betting on InflationYo Dude, Where’s the Deflation?UK Dec CPI Posts Largest Jump On Record to 2.9%Growing Unease About Old Lady’s SecrecySomething Odd in the Banking Bill

Mirror, Mirror on the Fall

As speculation matures into full-blown witness statements and accusations, Trinity Mirror have called in the law firm Herbert Smith and launched an investigation into phone-hacking across its titles. Until now there have been only present tense denials of such actions.

One shareholder told the FT they expected “nothing less” than an investigation, but it hasn’t come in time to stop the company’s share price going into free fall, with a 9.8% plummet on Monday since Guido, swiftly followed by the BBC, and grudgingly some other papers, began lifting the lid. He’s not sure a mere review is going to do much to reassure investors…

+++ Labour Votes No To £9.5 Billion to IMF Bailout Fund +++

A few moments ago in Committee Room 14 at the usually staid Statutory Instruments Committee, Labour members voted in the national interest.  Government whips got it through 10/6. Something very rare happened in what is usually the dullest of committees. A dozen or so Tory non-members of the committee came and spoke against affirming the instrument. Government whips cajoled the pliant Tory and LibDem members of the committee to vote to affirm the instrument while Tory MPs spoke from the floor against it. Promising new boy Steve Baker and backbench eurosceptic Douglas Carswell were among those who spoke against affirming the instrument. If Guido’s grasp of arcane parliamentary procedure is correct this will now have to go to a silent vote of the whole house without a debate.

Cross-Party Rejection of IMF Increase

As Guido mentioned yesterday, the Statutory Instruments Committee meets today to debate the £9.5 billion the government proposes to export to the IMF en route to Greece and probably the ECB. He hears it is a lively debate and that Labour are set possibly to vote against or abstain from supporting the transfer, potentially forcing a full Commons vote tomorrow…

The day Christine Legarde moves in to the IMF.

IMF Bailout Billions to be Debated

Tomorrow morning the Statutory Instruments Committee in Committee Room 14 of the Commons will consider for 90 minutes the extra £9.5 billion the government proposes to export to the IMF en route to Greece and probably the ECB. That is some £105 million per minute of debate. £9.5 billion is a lot of care for the aged.

Hat-tip: John Redwood

Inflation Outlook: Lindsay Lohan on Monetary Policy


Monetary policy arguments can sometimes seem other-worldly, the modern equivalent of the medieval intellectual battle over how many angels can dance on the head of a pinhead? Guido (neo-Hayekian) has been rowing with Will Straw (neo-Keynesian) for years – our latest skirmish is here. It is a difficult subject to popularise in an accessible way. Straw often cites David Blanchflower, formerly of the MPC and a favourite of Gordon Brown, to back his case. Blanchflower it was who predicted a year ago that if Chancellor Osborne didn’t undertake a £90 billion stimulus package, unemployment would hit 4 million. Osborne ignored him and unemployment is down as we undergo an expansionary fiscal contraction.

In turn Guido cites the noted American actress and legendary redhead bad-girl Lindsay Lohan. She has a manifestly clearer grasp of the inflationary dangers of quantitative easing than David Blanchflower:

Lohan’s analysis is right…

Hat-tip: Fraser Nelson

Ed Balls Take Note, Obama's Keynesian Stimulus Has Failed

It seems a long time ago that Will Straw, the former Treasury spin doctor under Gordon Brown now turned blogger and think-tanker, was arguing about the need for the Balls/Brown tax, borrow and spend stimulus plan. The voters and the 2010 general election put paid to that and George Osborne has resisted the calls of Balls (and Will) for more government borrowing to spend on boosting short-term growth. Will Straw argued, citing research by a “progressive” American economist, that spending increases were the most efficient form of deficit spending. The theory can now be tested against the outcome.

Obama did implement a massive $787 billion stimulus programme financed by more borrowing of the kind that Will Straw and Ed Balls still advocate. The chart above shows the results versus the predictions. Unemployment is far higher than the supporters of the “porkulus” projected, higher even than they projected it would be without wasting three-quarters of a trillion dollars. Not since the 1930s has US unemployment been so high for so long. Told you so.

+ + + Northern Rock is on the Block + + +

Chancellor tells assembled great and good in the Mansion House that Northern Rock is for sale. Get the taxpayers’ money back![…]

+ READ MORE +

UK Quietly Contributes £9 Billion to IMF Euro-BailoutsEquivalent to Adding 1½p to Basic Rate of Income Tax

Douglas Carswell has spotted a Statutory Instrument slipped in before parliament without prior debate, two pages of legislation which will cost the British taxpayer £9 billion, the equivalent of adding some 1½p to the basic rate of income tax. No debate, no big announcement, just another day of propping up the Eurozone on the backs of UK taxpayers.[…]

+ READ MORE +

Unemployment Has Peaked

The whole Ed Balls alternative economic strategy was first predicated on a double-dip recession, we hear no more of that nowadays, then it shifted from warning of a double-dip to lamenting slow GDP growth – even though UK GDP growth is above the EU average.[…]

+ READ MORE +

To Grow Faster, Go Further

Growth is anaemic, that much of the Balls critique is true, the cause is not the government’s spending cuts, they have barely started, the £6 billion down payment on deficit reduction is not even 1% of GDP. Some of the reasons are external; US economic doldrums, Japanese earthquake related supply-chain disruption, cost push inflation and some are internal; lack of business and consumer confidence, difficult credit markets and rising interest rate expectations.[…]

+ READ MORE +

The Bank of England's Great Inflation Swindle

Before finishing his term on the Monetary Policy Committee Andrew Sentance warned that the Bank of England is in danger of losing its credibility on inflation. Guido has been warning since 2008 that inflation is not a blip and that it was baked in to the economy.[…]

+ READ MORE +

Guardian Invested Millions in Hedge Funds During Banking Crisis Editor Rusbridger on Board Which Approved Strategy

Earlier this month the Guardian front paged a story revealing that the City of London accounted for £11.4 million of the Conservative Party’s funding in 2009 – 10, in lurid terms we learned of the millions passed to Tory coffers by rich hedge fund managers.[…]

+ READ MORE +

+ + + CPI 4% Inflation – Double Bank of England Target + + ++ + + RPI 5.1% Shoppers Feel the Squeeze + + +

So have you stocked up on beans or gold yet?  Have you taken Guido’s advice?

Inflation is always and everywhere a monetary phenomenon, if we don’t figure out a way to exit QE we will inevitably suffer double digit inflation.[…]

+ READ MORE +

Government Official Loses Bet on the Economy

This time last year an economist wonk at the liberal-leaning CentreForum took a dislike to Guido’s economic foresight. Deficit denying Liberal Conspiracy made a predictably over the top attempt at playing up the difference of opinion calling Guido innumerate, an allegation later quietly withdrawn.[…]

+ READ MORE +



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