Thursday, 7 April 2011

The Bank of England carries on with its strategy of robbing my savings...

UK inflation has been above trend for over two years - we had one brief, nay fleeting, moment of negative inflation but otherwise there has been no sign of the economy collapsing into a terrible deflationary spiral. And, you've guessed it folks, there never was a real risk of deflation.

Today - with rocketing inflation as a result of quantitative easing and other lunacies - the Bank of England carried on with its anti-debt strategy of inflating our way out of the problem. Also known as robbing the savings of prudent folk to pay for the debts of the irresponsible - and nothing was more irresponsible than the last Labour government.

We won't know the Bank's justification for this action until the minutes of the Monetary Policy Committee are published later this month. But we can guess that some mealy-mouthed words about 'not risking the recovery' will feature. Indeed, the interests of big business are uppermost in the Bank's deliberations - as is clear from the British Chambers of Commerce's response:

"Businesses will welcome the MPC's decision," said BCC chief economist David Kern, who called for any rate rise to be delayed until next year.

"Premature rate increases will have negative effects on growth and jobs. With wage increases remaining subdued, we strongly urge the MPC to hold its nerve and avoid taking any action that may risk derailing the recovery."

In the meantime, the inflation caused by this strategy - boosted by the irresponsible US stimulus and the reaction to britain's QE - is eating into my savings and making it harder for millions of pensioners stuck on a fixed income. Thanks for nothing, Bank of England.


1 comment:

Ian R Thorpe said...

The 0.5% interest rate was never anything other than devaluation by stealth.