They want their cake cut both ways and with an argument either way but they fail to appreciate that British people aren’t daft enough to see they aren’t cutting any of that cake for them because Labour has already scoffed it.

More likely is a resurgence of inflation in the next year. As the BoE (and the Fed in States) starts to increase the money supply (thru Quantitative Easing) so eventually the mood in the economy will change: there will be so much money in the economy that people will want to get rid of it, exchanging it for “hard” assets – gold, silver – for fear of the inflationary conseqences of King’s and Brown’s/Mandy’s fool hardiness. The money created out of thin air to date has stayed in bank’s reserves as they build up their asset ratios. They will reach a point when they will start to lend this out. And so the inflationary spiral will begin. Ofcourse the monetary authorities could employ effective counter expansionary action. But they have singularly failed to do this in the last 12 years so what makes anyone think they will be better at it this time around?

And there will be no improvement in unemployment as inflation takes off again either. The belief that higher inflation inevitably leads to lower levels of unemployment is mistaken. Even with unemployment approaching 2 and then 3 million there will not be a universal unemployent of all of the factors of production (including labour) that industries will need to expand. Bottleknecks will be rife.

The whole deflation argument is to soften up the people for the printing of money in order to inflate away the debt. No doubt some dodgy statistics will be used to hide it until the last possible moment by which time it will be too late.

For those who think devaluing the currency is a good thing I recommend looking at the growth statistics from the 70′s and 80′s when we last “devalued”. The only way forward is to get back to sound monetary policy (thats money supply growth and not inflation) and supply side policies. Otherwise the next growth cycle will be demand driven with no supply resulting in inflation…..

Indeed.

And by the same logic the declining Zimbabwean dollar is fueling an asset price boom in Zimbabwe.

Numpties.

I thought it was quite the opposite: a. national wealth should increase as we export profitably to customers outside the country, thus earning money. b. inflation will indeed suffer an upward spike from higher import costs due to the weakened pound, but only this year. Next year there will be no similar inflation in cost of imports (unless of course the pound falls again), and so inflation should collapse to zero or below.

Have you expressed a view yet as to the inflationary effects of the quantitative easing that we keep hearing about in the news? This seems to me to be a problem in the making; if we have a lot of inflation from this source, I don’t know when and where we could expect to see it.

Kind regards

Reply: I have. I said there are inflationary dangers fron such a measure if it is undertaken in conjunction with high levels of state borrowing and spending and if it is not withdrawn early into the recovery.