Friday, 20 May 2011

BoE 'Inflation, Thats Our Job'

"The MPC's chosen approach has been to accept a temporary period of above-target inflation, rather than seeking to hold inflation as close to the 2 per cent target as possible at all times."
Charlie Bean, Member of the BoE Committee

News it may be to many, but for readers here this is not news. This is how Governments work. Goalposts move. Targets change. Inflation is always present. People looking for action on Inflation from Central Banks are looking in the wrong direction. These people create inflation, not control it. With private and public debt out of control they are 'secretly' creating inflation.

When I have mentioned previously of interest rates going to double digits during the decade this may seem scary in the current time-frame. But by that time  debts will have been drastically erroded by the damaging effects of inflation over the years to come. Negative interest rates, where inflation out paces the savings rate is here to stay for some time. When interest rates hit 10%, expect inflation to be at least twice that rate.

The central banks primary function is not to fight inflation, or to sustain economic growth. Its job is to prop up the whole fragile fractional reserve banking system. Its aim is to ensure financial collapse does not occur. This means re-leveraging the system back up and and trying to inflate their troubles away. It takes a while for people to become sick of inflation. Britain had terrible inflation for over a decade during the seventies. No one did anything as the public didn't feel strongly enough over the issue for some time. Its going to be the same again. Inflation is here, 4.5%, double the targeted rate, but no one in the public wants to do anything about it. Most people are so heavily in debt, they want it.

The Bank of England's comments will worry no one. The words may even reassure people. The deflationists are wrong, as they have always been since the post war era. With Central Bankers running a monopoly on the printing press, how can we ever have deflation?