An interesting prediction

Mark and note:

Howard Reed says:
February 27 2021 at 6:12 am
I think the risk of sustained inflation in the 2020s is miniscule. While there is some pent-up demand and a possibility of a slight uptick in inflation when the current lockdown eases up and things become a bit more normal, that’s all it will be – a slight uptick, if that. CPI inflation is currently 0.7% on the latest annual figure, so it might rise to 2 or 3%. So what? I would then expect it to fall back below target after a few months. You and Danny are absolutely right on this. It’s a storm in a teacup, being propagated by the same inflation hawks who have been consistently wrong ever since 2009 in predicting a massive increase in prices.

I do think that without the reversal of QE at some point there will be a significant inflation. There’s a lot of weight on that “at some point” of course.

But we’ll see, won’t we? The universe being nice about stuff like this, it does, eventually, test predictions.

21 thoughts on “An interesting prediction”

  1. The inflation measures these idiots are looking at ignore the massive asset price inflation that has happened over the last 10 years. Have house and property prices remained flat?

  2. Cost of a tradesman is up a lot
    Cost of NHS care always goes up faster than inflation. Care home fees for those paying privately also. Council tax up. Cost of freezers and home exercise equipment up.
    As Diogenes says, cost of housing.
    Self-catering accommodation in UK only going to go one way when they re-open.

  3. Sorry for the off-topic post but I could use some recommendations on reading materials and I know regulars here are far better informed than those on the forums I normally haunt. What I’ve been learning about is Lenin’s Third Way(the New Economic Plan) and those inspired by that way. I believe I have a good handle on Mussolini, Hitler, FDR, Franco, and Deng. What I’m looking for are other countries, the leaders, the propaganda, and the actual results.

    I’ll check back in a few hours. Thanks in advance.

    FYI for those that don’t remember me the Liberal in my handle is classical liberal, not illiberal liberal like most Yanks who claim to be liberal actually are.

  4. Hmm, outside of asset prices, have western/developed economies managed to export domestic inflation pressure to China via Amazon/eBay, etc, etc?

    China can soak that up – yuge population – for a bit, and remain unexposed to global commodity prices (US$) by using domestic coal.

    Those ghost cities in Africa – have the Chinese been attempting to export excess cash to keep their own domestic inflation under control?

    China’s been on the economic reform path for thirty-odd years now.

    https://www.scmp.com/news/china/politics/article/3123174/xi-jinping-declares-extreme-poverty-has-been-wiped-out-china

  5. LY – you mentioned Franco, but also Israel, India and Ireland – and the transitions away from it.

    Turkey & the Ottomans? Vietnam? May be Japan as well.

  6. Re inflation in the UK, my energy supplier has just informed me that my bills will rise by about 10% next year because of higher wholesale prices and the increased cost of distributing that energy. Deny that Mr Potato!

  7. Keep it up, Tim.

    My main case for inflation is that the great and the good – including the Reserve Bank of Australia where I am (Oz, not the RBA) -keep telling us that there will not be inflation.

  8. “Re inflation in the UK, my energy supplier has just informed me that my bills will rise by about 10% next year because of higher wholesale prices and the increased cost of distributing that energy. Deny that Mr Potato!”

    And such inflation would be even worse under his Green New Deal of course……..the whole point being to increase the cost of energy.

  9. Inflation happening- yes.
    Hyperinflation and currency collapse? I really don’t know anymore. I have upstairs Detlev Schlichter’s (10 years old now) Paper Money Collapse and the events he and others around at that time were predicting still haven’t happened (yet).

  10. Never trust an economist who can’t spell minuscule* (or work out how to use a spell checker).

    * yes, I know it’s such a common mistake that it’s now in some (inferior) dictionaries as a variant spelling – it’s still wrong, though 🙂

  11. Have just thumbed through this morning’s FT: everyone wetting themselves over the return of bond vigilantes and the bumpy ride back to inflation. Can’t be arsed…whatever will be will be (Geno Washington & the Ram Jams rather than Doris Day).

  12. Diogenes,

    Thank you for the response. Commies who admit they are commies and are only liberalizing the economy to reach the full maturation of capitalism Marx stated was a necessary precursor for the dictatorship of the proletariat to successfully wither away into the ideal communist society are those I definitely want to know about. Deng was already included in my list as he is the leader who has most successfully(In my current opinion) applied Lenin’s Third Way theories.

    Ducky McDuckface,

    Thank you for the list of countries. It would be helpful to know which time periods to focus my initial explorations on.

    Ottokring,

    Not yet. I’ve requested a copy be sent to my local library branch. Nove isn’t germane to my current search but now that you’ve mentioned him it seems obvious that I should have been reading his work in far greater detail previously. Thank you.

  13. Countries –quite a few of them–have suffered hyperinflation.

    Bottler Brown printed a shitload of funny green 2008/9 but as Tim said at the time it mostly went to boost bank reserves and didn’t get into circulation–if my memory serves.

    Now the fuckwit Great Paid Holiday of Mugs is on to July. And 400 thousand million will be a reasonable projection of how much cash dodgy bond salesman Spewknack will have created by then. Wartime spending.

    Hyper-inflation–not yet. But prices are going up in the shops by more than 2%.The big Lurpak butter pack that used to be £4 is now £6.50 and the choc biscuits that were £ 1.10 are now £2.30.

    Hyper-inflation seems to take quite a few turns of spiralling prices before it takes off. But the principle that the supply of anything increasing reduces the value of that thing makes logical sense. I’m not betting against big economic bad news. World already drowned in debt and lots of mugs with no jobs and no tax base to pay benefits will mean lots more funny money printing yet to come.

  14. Chris Miller,

    I’ll never see 70 again and I must say that I don’t think I have ever seen it spelled with two “u”s.

    Thanks for the lesson.

  15. @another Chris

    I don’t think it’s a US variant spelling – but better check in your Funk & Wagnalls. Hope things are well with you in Texas, there’s an article from the great Michael Moorcock (an occasional contributor) in this week’s Speccy.

  16. CM

    From my dictionary,

    Although this newer spelling is criticized by many, it occurs with such frequency in edited writing that some consider it a variant spelling rather than a misspelling.

    I am of the opinion that wrong is wrong, no matter how many people do it.

    Does that make me a “pendant”?

  17. LY – mostly post-’45. For Ireland, post-’23. Vietnam – after the war, so mid-seventies?

    The thought occurs that most of those countries are ex-colonies (kinda depends on how you define Israel, there), with the exception of Japan – which is a bit odd, given the LDP, being a sorta one-party state.

    Turkey (post-Ottomans, so after 1918 or so) would be similar to Russia being an ex-Imperial power (although the USSR would simply be Tsarist Russia under new management, and thus similar to China, I suppose).

    Pakistan and Cambodia might also be interesting.

  18. Ducky,

    Thank you very much for the Vietnam tip. I know now that Đổi Mới began in 1986 and is the perfect counterpoint to pair with the limited liberalization attempts the Kims(North Korea) attempted. Previously I thought the Vietnamese were mere just Deng copiers, but there is some serious pro-capitalism going I underestimated. Since I believe this will help I have found Guandrain articles useful for establishing propaganda relationships. In case you’re wondering, yes, I purposely misspelled Guardian to indicate my disrespect for that leftist rag.

    Israel is a deeper conundrum. That post-Great War state has altered between hot and cold wars for all of its existence. Given the obvious existential threat from declared enemies like Sudan(pre-revolution) I can understand the necessity of bigger government economics despite the recent so-called “peace” treaties with non-enemies like UAE and Morocco.

    Ireland still has me bamboozled. Despite a variety of search terms as far as I can tell them Micks just wanted the English to GTFH. India isn’t all that much different as long as I account for the Hindu/Muslim rift. Japan seems to me to be what it was pre-Perry, a nation that presents a untied front against outsides. The Turks are Turks…

    I could go on but what I’m currently most interested in is the leaders who tried to use their power to fully mature capitalism so the could install their ideal dictatorship of the proletariat. As far as I now there are few success stories. Those I know of involve liberalizing communist economies instead of going full-commie, or not exactly what Marx had in mind.

    Disclaimer: My personal opinion is that it is impossible to fully mature capitalism because free market capitalism is an evolutionary economic system based on rewarding the fittest that manage to survive any challenges any other ideology can throw at the astute capitalist, as long as (s)he has access to the consumer and (s)he controls means of production that can chase demand.

    Second disclaimer: This is most definitely not a how-to manual. Should you try to use it as such, going so far as to employ government force to stop the astute capitalist, the best you can hope for is a draconian police state. Should you not be willing to order the necessary suppressive measures expect a black market that provides what you try to suppress.

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