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Unread 22-06-2022, 07:39 AM
Switching Off
 
Default Inflation

Up to over 9%, highest rate since 1982. Interesting thread here discussing the tory claim (Raab has literally just said it on BBC1) that increasing public sector wages will create an inflation spiral.

Great news for the pensioners though.

 
Unread 22-06-2022, 08:30 AM
red red robbo
 
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Yep, exactly what I've been asking someone to explain to me for months, how cutting people's available cash is going to prevent inflation of essential goods and services whose prices are being pushed up by world events and government inaction, not by unnecessary demand.

It's like watching a train crash in slow motion, and every time there is an opportunity to stop it, or lessen the impact no one (and in this case it's the government) does anything.
 
Unread 22-06-2022, 08:42 AM
Hyman_Roth
 
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Had this debate yesterday about the pointlessness of increasing interest rates. Iím struggling to see why it would curb this kind of inflation which is supply side led not demand led.
 
Unread 22-06-2022, 08:49 AM
Finport Red
 
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Quote:
Originally Posted by Hyman_Roth View Post
Had this debate yesterday about the pointlessness of increasing interest rates. Iím struggling to see why it would curb this kind of inflation which is supply side led not demand led.
100% this.

Itís almost like they donít understand what theyíre doing. Almost.
 
Unread 22-06-2022, 08:51 AM
jem
 
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increasing interest rates alone will not solve the main inflationary pressures, which are not due to cheap borrowing. however, changes in interest rates and wages both affect inflation. the problem for the boe and government is that they can't do a lot, but feel they have to do something. and increasing interest rates or limiting wages just cause other problems.
 
Unread 22-06-2022, 09:01 AM
My Name is Heath
 
Exclamation

Itís not very good.
 
Unread 22-06-2022, 09:11 AM
Hyman_Roth
 
Default

Quote:
Originally Posted by jem View Post
increasing interest rates alone will not solve the main inflationary pressures, which are not due to cheap borrowing. however, changes in interest rates and wages both affect inflation. the problem for the boe and government is that they can't do a lot, but feel they have to do something. and increasing interest rates or limiting wages just cause other problems.
Well they could and should reduce vat on fuel and groceries. Why arenít they? They could tax the energy companies.
 
Unread 22-06-2022, 09:13 AM
Sapien
 
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O2 and Virgin media mobile contacts have an automatic RPI (currently 11.7%) + 3.9% increase after 1 year. Looks like the gov are going to pressure the mobile companies to lower these increases though.
 
Unread 22-06-2022, 09:14 AM
jem
 
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Quote:
Originally Posted by Hyman_Roth View Post
Well they could and should reduce vat on fuel and groceries. Why arenít they? They could tax the energy companies.
they do tax energy companies. groceries shouldn't incur vat ever. fuel duty was cut (pathetic, but still...).
 
Unread 22-06-2022, 09:26 AM
tatty
 
Default

Some economists in the US are calling for Volcker 2.0.

I just donít see the appetite, or strength of will, in the political class to create demand destruction through recession and job losses.

The history of inflationary periods suggest we may have a hard time escaping the loop once pay demands are matching/exceeding price rises.

I donít actually think governments are overly concerned with inflation running hot anyway, somebody had to pay the bill for the excess since the GFC 08, and inflation is a tax on everybody that is never actually voted for.
 
Unread 22-06-2022, 10:00 AM
Hyman_Roth
 
Default

Quote:
Originally Posted by jem View Post
they do tax energy companies. groceries shouldn't incur vat ever. fuel duty was cut (pathetic, but still...).
Sorry not groceries.

You say itís limited what they can do and so fiddling going around with internet rates is about it. it isnít - they could go further - certainly vat on fuel - the amount of tax on petrol is insane and unjustifiable.

And then they introduce a fuel grant that isnít means tested - 2nd and 3rd property owners benefit from it ffs.

Theyíre f***ing clueless.
 
Unread 22-06-2022, 10:04 AM
red red robbo
 
Default

Quote:
Originally Posted by Hyman_Roth View Post
Sorry not groceries.

You say itís limited what they can do and so fiddling going around with internet rates is about it. it isnít - they could go further - certainly vat on fuel - the amount of tax on petrol is insane and unjustifiable.

And then they introduce a fuel grant that isnít means tested - 2nd and 3rd property owners benefit from it ffs.

Theyíre f***ing clueless.
They'd benefit from a cut in VAT as well to be honest. And the cost of means testing the payment would be pretty high and probably easy to get around if you could afford the accountants. Six months free council tax would be better maybe. The council know if a property is your main home or not I believe, so it could be targeted at primary residences and those below a certain band, like the payment earlier this year.

Oh, and VAT should be removed from energy supplies as well of course, it's not meant to be applied to essential items.


Also, not all groceries are currently VAT exempt, hence the Jaffa Cake biscuit/cake legal case
 
Unread 22-06-2022, 10:13 AM
Hyman_Roth
 
Default

Quote:
Originally Posted by red red robbo View Post
They'd benefit from a cut in VAT as well to be honest. And the cost of means testing the payment would be pretty high and probably easy to get around if you could afford the accountants. Six months free council tax would be better maybe. The council know if a property is your main home or not I believe, so it could be targeted at primary residences and those below a certain band, like the payment earlier this year.

Oh, and VAT should be removed from energy supplies as well of course, it's not meant to be applied to essential items.


Also, not all groceries are currently VAT exempt, hence the Jaffa Cake biscuit/cake legal case
Just remove the ability for 2nd or more home owners to benefit. Itís not that difficult.
 
Unread 22-06-2022, 10:21 AM
jem
 
Default

Quote:
Originally Posted by Hyman_Roth View Post
Sorry not groceries.

You say itís limited what they can do and so fiddling going around with internet rates is about it. it isnít - they could go further - certainly vat on fuel - the amount of tax on petrol is insane and unjustifiable.

And then they introduce a fuel grant that isnít means tested - 2nd and 3rd property owners benefit from it ffs.

Theyíre f***ing clueless.
*sigh*

that's not what I said, but I was essentially agreeing with you. as always, though, I was trying to be accurate, rather than judgemental. I am not trying to justify the approach they have taken on any of this. obviously, they could have taken different decisions (although some of your suggestions have negative effects as well).

trying to end the war in ukraine (one way or another) is clearly more important than f***ing around with 5p on petrol prices.
 
Unread 22-06-2022, 10:38 AM
red red robbo
 
Default

Quote:
Originally Posted by Hyman_Roth View Post
Just remove the ability for 2nd or more home owners to benefit. Itís not that difficult.
How?

The way the discount is currently being applied is directly onto the energy bills. The energy companies have no way of knowing whether or not a property they send the bill to is someone's second home or not. If you made people apply for the discount loads wouldn't bother, loads wouldn't be able to understand the ridiculously over-complicated online system that would be put in place, and those who did own second homes would be able to work out a way around it.

That's why I said administering it through the council tax system is probably the easiest way to do it fairly.
 
Unread 22-06-2022, 10:39 AM
tatty
 
Default

Quote:
Originally Posted by jem View Post
*sigh*

that's not what I said, but I was essentially agreeing with you. as always, though, I was trying to be accurate, rather than judgemental. I am not trying to justify the approach they have taken on any of this. obviously, they could have taken different decisions (although some of your suggestions have negative effects as well).

trying to end the war in ukraine (one way or another) is clearly more important than f***ing around with 5p on petrol prices.
Thereís a vested interest intent on continuing the war for as long as possible.

And it isnít Russia or the Ukraine.
 
Unread 22-06-2022, 10:45 AM
jem
 
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Quote:
Originally Posted by tatty View Post
Thereís a vested interest intent on continuing the war for as long as possible.

And it isnít Russia or the Ukraine.
true as this may be, it doesn't doesn't change the effect it would have.
 
Unread 22-06-2022, 11:47 AM
armchair
 
Default

 
Unread 22-06-2022, 12:22 PM
red red robbo
 
Default

Quote:
Originally Posted by armchair View Post
Printing money did not cause shortages in the supply chain.

Arguably, things would have been worse if the banks had not. If demand had totally collapsed during covid then it would be even harder to ramp up supply of goods and raw materials.
 
Unread 22-06-2022, 12:52 PM
tatty
 
Default

Quote:
Originally Posted by red red robbo View Post
Printing money did not cause shortages in the supply chain.

Arguably, things would have been worse if the banks had not. If demand had totally collapsed during covid then it would be even harder to ramp up supply of goods and raw materials.
Whilst supply chain issues are obviously a major factor it is also clear that the trillions of dollars/hundreds of billions of pounds injected in to the system is going to have an even greater long term effect on inflation.

We are now getting what we probably should have had post-GFC QE.

And if you get a chance take a look at the awful position Legarde and the ECB are in with the differentials on the 10 year across the Eurozone. The EU is going to have to choose between rampant inflation or protecting the project.
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