Succinct and to the point - they will have taken price control to a new low level totally distorting the market and risk. The unfortunate fact is that it's only a mater of time before the side effects of this policy become all too apparent!
Please highlite those effects for the hard of thinking, Rick.
Price Control = Shortage + Inflation.
It didn't help when they cut interest rates from 5% to 1,5%. What makes them think that it will help cutting them from 1,5% to 1%?
Price controls also cause overproduction.The money supply is excessive for our needs and should shrink, unfortunately there is no way to shrink money supply in a debt based fiat system. There is only one solution which is to inflate away the debts, hence everybody with a brain having already abandoned sterling. (yes, you are too late now).
I see that the Building Societies pleas for some return for those on fixed income got taken very seriously by the Prime Minister and Merv King, before they slam dunked it into the rubbish bin.They could have only made it better by joining the board of RBS for a celebratory £ note burning session, broadcast live on daytime tv during the break of Channel 4's 'Countdown' game show.Once we get Quantitative with our easing, we'll be well on our way to that sunny Zimbabwe feel to our economy, and won't the pensioners love that.
Over the past few weeks sterling has strengthened against major currencies. E.g now 1.14 euro to the pound. Abandoning the currency is not the answer. It's a fools game to start switching currencies.
> Over the past few weeks sterling has strengthened >against major currenciesDead cat bounce.
they will have comprehensively wrecked the UK economy. Never mind the private sector bankers and borrowers. Merely spectators.
> there is no way to shrink money supply in a debt based fiat system.Nonsense, raising the reserve ratio will do it.As will making banks take losses off their reserves. The government is desperately trying to stop the above as it will highlight how little economic growth we've really had during the Labour party disaster.
I only have to look around my area to know next to no growth has occured during the New Labour years. There has been a bit of an uptick in consumer side of economy, but in terms of new jobs and companies that pay well, nothing. By the way, the currency will drop to dollar par by mid-2009 so make hay while the sun shines.
Once we get Quantitative with our easing, we'll be well on our way to that sunny Zimbabwe feel to our economy, and won't the pensioners love thatOhhh - I want a Technical, some RPG 39's and a tonne of Khat for me retirement then (or is that Somalia?) .
> or is that Somalia?Brixton.
How long will it be before gilt yields start to rise? Not long, I fear.