You say:

Lets face it the problem is not collecting taxes, but the immense size of the spending on government non jobs and waste.

Of course govenment is not perfect. It’s run by people. But please prove this is the problem.

You haven’t. I have not yet seen anyone do so. Where would you begin?

Why does no party facing the prospect of power agree with you?

Could it be you are simply offering a rant, not an argument?

Richard

How do businesses and individuals survive when inflation robs them of the benefit of their economic activity and trade through rising costs and falling living standards? Answer me that!

All this about the rich elite hording piles of banknotes is a nonsense. Inflation greatly benefits the wealthy elite as us poor mugs are the ones paid in ever more tin like coin and our savings are destroyed.

You have rightly diagnosed the fake boom we have lived through due to problems in the inflation measure not capturing inflation in homes, which are simply capital assets. The resultant money bubble from this lending is now wreaking its way throughout the economy in the form of inflation, and the lenders are having to cut back the flow of credit and purple loan ads.

And now we face a period of deflation in those same absurdly valued goods, but only until a rational balance is struck - not forever! Its not the end of the world! To prevent this to occur by using inflationary tools will just leave a shattered economy and society going nowhere for years.

Lets face it the problem is not collecting taxes, but the immense size of the spending on government non jobs and waste. Where does money come from? The value of money is from production not from debt/inflation fuelled consumption with some lucky people holding inflating assets against which money is printed, the others losing out!

Inflation is ALWAYS someone elses lost! It means you and me and millions of others are working for money today which is to be devalued tommorow. The rich would be the only ones to suffer - HA! I see the suffering ‘rich’ in a trip to italy where such policies where tried.

The rich in your inflationary paradise are not suffering greatly, while ordinary folk with thier million lira houses, supported though inflation bask in the caro vita/dear life!

The place is like the 3rd world, and now has food riots! I have seen real poverty in that country which is still unthinkable in the UK.
And what a paradise - Each worker has a non job which inflation and endless insane government regulation support, and everyone can attend university.

Its a shame you have to beat the queue of 2000 people round the block to catch a whisper from the only lecture theatre, and might leave with your degree when your 30 - if your lucky!.

Inflation in the 1990s has basically destroyed that country and its many industries, dispite the immense talents of its people and the forces holding them down, one or two talents still bob up. Oh - One other thing - if price is the market signal to invest and biuld capacity or clear capacity, then what does inflation eventually do to all markets? What insanity calling for inflation!

So what if houseprices fall? Its about time! It’s better than having a currency like the lira and a government to match.

Why do we not bail out failing UK industries to preserve jobs like the coal miners or type setters at wapping? Because each one of us would be paying higher costs in lower living standards and higher unemployment would occur elsewhere in the economy, through higher energy costs making many businesses unviable.

Firms would face higher costs as a whole and we would lose many trade markets which have to pay for our imports.

I agree with everything you say otherwise, by the way.

You say, “But is this a price worth paying to seek to stabilise an artificial measure of inflation?” Of course, price inflation is running much higher – recent calculations have placed it between 12-18%, coincidentally, approximately the rate of monetary inflation preceding our present downturn. You say, “Well, just repeal the legislation that gave that right away I say, get the Bank back under political control and get interest rates down to 2%.” We used to have a thing called “credit control” and “minimum reserve requirements” – controls over the growth of credit that have slowly, over the years, faded like the notion of “saving money for a rainy day”. The truth of matter, as I see it, is we have reached peak credit – the spending spree is at its end. There will be no long-term recovery, because our economic model is bankrupt – it is unsustainable; it is a broken model. By holding 2% interest rate, you may affect the speed of the downturn (the angle of its slope so to speak), but it will not change the direction. Therefore, your 2% solution is a Band-Aid; not a fix. This should be a wake-up call that will be ignored.

You say, “And is all this social disruption worth unleashing on our economy just to preserve the property rights of those with wealth? Because, make no mistake about it, the obsession with inflation is about preserving the property rights of those with monetary based assets.” How about, instead, we tax the wealth accumulated through the rise in property values as income? Too late now? Great blog Richard! Thanks.