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. Letter after letter from Mervyn King to the Chancellor has excused missing the inflation target as temporary and promised it would decline in the months ahead. Promises now shown to be demonstrably false.

Ladies and gentlemen, Guido presents the Great Inflation Swindle, we have just seen the second-biggest one-month increase on record and a record high in core CPI yet the Governor of the Bank of England has told us for 3 years inflation was a blip and that the real danger was deflation. It was a deliberate lie to excuse the most reckless monetary loosening since… well, actually monetary policy has been too loose globally since back to 1998 when Greenspan “saved the world” after Long Term Capital’s financial theory geeks had a close encounter of the reality kind. The loosening up of monetary policy to smooth the aftermath of that hedge fund collapse told financial risk takers to rack up the risk because central banks would step in if you got in to trouble. Everyone was “too big to fail”. Central bankers turned capitalism from a system of profit and loss into a system of private profits and socialised losses. Taxpayers had their chips put on the gambling table without even being asked. 

From 1998 to 2008 central bankers failed in their primary task of taking the punch-bowl away when the financial party gets too swinging, drunk on cheap credit and easy profits. In 2008 the solution when the excrement hit the air-conditioning, with interest rates already at rock bottom, was Quantitative Easing (QE). The excuses given for printing money on such a massive-scale were two-fold, to ward off  an imaginary “deflation” bogeyman and to provide an economic stimulus. Those of us who said this would inevitably result in inflation were shouted down. We now have inflation at almost double target and rising, the huge cost of the monetary stimulus has provided very little growth and undermined Cameron’s stated aim of “sound money“.

“Sound money” is not something that the Bank of England seems to be aiming for or even expecting. Guido has remarked on the Bank of England Pension trustees prescience before, their success is a little short of scandalous. If there was evidence of insider trading at a normal fund the investors would be in jail. Whilst Mervyn King’s Bank of England scaremongers about a deflation bogeyman his pension bets on the exact opposite – buying inflation protected securities on an amazing scale. Guido has discovered that Mervyn King’s pension is 94.7%* invested in index-linked, inflation protected securities, up from an already remarkably high 88.2% the year before.

This is the exact opposite of what you would do if you really feared deflation, in a deflationary environment fixed income securities rocket, out-performing index-linked securities. Mervyn King’s Bank of England pension pot profits from doing the exact opposite of what it should if the trustees believed the Governor’s pronouncements were credible.  This is no accident, Guido believes it is the deliberate policy of the Fed and the Bank of England, with the complicity of their political masters in the US Treasury and HM Treasury, to inflate their government debts away. Inflation is a pernicious form of taxation, it punishes the old and those who save and leads to a worse reckoning in the end. We are being deliberately swindled by the political elite.

*Just 22% of UK gilts are inflation-protected, the Bank of England pension fund’s skew towards expecting inflation is that pronounced.




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

Quote of the Day

President Trump at the UN:

“The problem in Venezuela is not that socialism has been poorly implemented but that socialism has been faithfully implemented.”

Sponsors

Guidogram: Sign up

Subscribe to the most succinct 7 days a week daily email read by thousands of Westminster insiders.
Labour Moderates Screwed Labour Moderates Screwed
WATCH Boris: “I’m Not Resigning” WATCH Boris: “I’m Not Resigning”
Corbynistas Seek Right to Suspend NEC Elections With “Venezuela Amendment” Corbynistas Seek Right to Suspend NEC Elections With “Venezuela Amendment”
Osborne Repents Osborne Repents
Meanwhile on Labour’s Facebook Forum Meanwhile on Labour’s Facebook Forum
Heywood Breaching Cabinet Manual by Bypassing Ministers Heywood Breaching Cabinet Manual by Bypassing Ministers
Green NGOs Spend Taxpayers Millions Lobbying Government Green NGOs Spend Taxpayers Millions Lobbying Government
May Talks Down CETA Plus Option May Talks Down CETA Plus Option
Momentum Chair: “I’d Rather Have Solidarity With North Korea Than USA” Momentum Chair: “I’d Rather Have Solidarity With North Korea Than USA”
DEx-ODUS Continues DEx-ODUS Continues
WATCH: Lol-Ney Simply the Best WATCH: Lol-Ney Simply the Best
WATCH: Boris Meets Trump WATCH: Boris Meets Trump
EU Berets at LibDem Conference EU Berets at LibDem Conference
Cabinet Brexit Split: Where They Stand Cabinet Brexit Split: Where They Stand
Gardiner: Watson Not Up To Explaining Single Market Late at Night Gardiner: Watson Not Up To Explaining Single Market Late at Night
Loser LibDems Losing the Plot Loser LibDems Losing the Plot
Heil Duncan! Hitler Tash on Alan Heil Duncan! Hitler Tash on Alan
Boris Article Wasn’t Wrong About £350 Million Boris Article Wasn’t Wrong About £350 Million
Green: No, Boris Won’t Be Sacked Green: No, Boris Won’t Be Sacked
Rudd Refuses to Answer If She Wants to be Leader Rudd Refuses to Answer If She Wants to be Leader