Tuesday, March 25, 2014

Inflation falls to 1.7%

UK Inflation as measured by the Consumer Prices Index has fallen to 1.7% last month, which is a new four-year low, the fifth consecutive month that the rate of increase in prices had fallen, and the second consecutive month that inflation in Britain has been below the Bank of England's target that the CPI should not rise by more than 2% per annum..

Inflation as measured by the Retail Prices Index which used to be the main measure until the previous government switched to CPI a few years ago, also dropped, from 2.8% to 2.7%.

This is further evidence that,although there is still a long way to go, the government's Long Term Economic Plan is starting to put Britain's economy and the country on the right track.

To replace those policies in favour of those who would stop trying to reduce the deficit, spend more, and borrow more, would be an act of insanity and would betray the future


Jim said...

Isnt that swell, nothing is getting to be a lesser amount of extra nothing.

I did ask you to look into these things chris and you failed, also i told you, you had your work cut out.

you failed with an E- last time, so come on see if you can do better. What is "money"? How is it created? what creates it? how does it end up in circulation?

Last time i asked this you wittered on about how it has perceived value, but never actually answered a question that was asked, only answered something that was not.

That is the "nik kershaw directions to the pub" answer"

if you missed out on that imagine asking this guy "could you tell me the way to the manor house in st bees please?"


Chris Whiteside said...

Jim, you are entitled to disagree with the opinions I expressed but I am equally entitled to retain them.

At the risk of appearing patronising (although your giving me grades was pretty patronising in itself) I spent four years of study at two universities learning economics, and at the end of the second, third and fourth of those years I spent something like something like forty hours in total sitting final exams which were marked by professional academics including external examiners.

I think the fact that those institutions then awarded me two degrees in Economics is probably a more reliable guide to whether I understand the subject than an opinion expressed in the comments of a blog.

We could spend weeks holding a "how many angels can dance on the head of a pin" argument about the exact definition of the word money - some of my fellow economists who are employed in academia rather than, like myself, working for a commercial business which has more urgent things to argue about, have been known to indulge in precisely such arguments. But you and I both know that in practical terms money is a means of exchange - e.g. anything which can be usd to buy a tangible or intantible asset.

Who creates it? Governments and banks. We could spend weeks arguing over that one as well.

How is it created and how does it end up in circulation?

I spent some of those hours in my final exams answering those questions and I have a couple of degree certificates to prove I got the answers right but I'm not going to go into them here.

If you or anyone else is really interested I can happily give you details of some good economics textbooks available at any good library which will explain the answers in simple and accessible terms.

"Where Does Money Come From?" by
Josh Ryan-Collins, Tony Greenham, Richard Werner, and Andrew Jackson is a good start.

Jim said...

Let me expalin something, and I dont mean it to sound patronising or arrogant so sorry if thats how I come accross, I really dont mean to be.

Lets say I sit a scientology exam, I answer all the questions according to what the examiner wants me to say. Of course i pass with flying colours and it proves i listened to the course and remembered what the teacher wanted to hear. It does not mean i have the correct world view though, I could have answered all the questions honestly (in my opinion and to my knowledge of science )and would fail miserably. Not because i have given a "wrong answer, but because i did not just swallow scientology up. Now it is possible to be wrong and right in a maths exam, as 2+2 can only ever equal 4. But its about the only subject that you can be right or wrong. Newton was right (but einstein was more right later). Other examples would be things like "you pass your driving test, then you learn to drive"

Money does not exist, its that simple it really is. All that does exist is debt (which can be moneterised) and credit. The only way currency (a promisory note) can be created is by someone borrowing it into existance. Taking out a loan (going into debt) and monetising that debt. Immediatly the books balance, the leger is always 0 it has to be. i go and borrow £100 using my £100 credit, the bank gives me £100 debt and monetises it, thus £100 cr + £100debt = 0.

now the money bit is nothing is it, its a promise to pay, thats all it is, but its a promise that is never kept. cash is never converted to its promisory amount, no one actually knows what the sum of 10 pounds is. so when you go to a bank and sign (thus create debt from your credit) the bank give you IOU notes which represent debt. the leger is 0, but the banks want to double dip and claim this "money" again, even though the ledger is 0. You never actually borrowed anything, the bank did not lend anything, they provided a service to monetise the debt (For which it would be fair to charge a fee of say 5%, But not 100% + interest which was never created). Think about it logically, if the only way money comes into existance is by being borrowed at interest then the money can be repaid but the interest cant, its not there, it does not exist. So the banks monetise the debt give you your hundred pounds of debt notes then they use that same signature to create 8 more lots of 100 pounds debt notes, then sell that debt to someone else, then expect you to repay them another 100 pounds plus interest. Its madness isnt it.

Put it another way, I go to a pawn broker and pawn my wedding ring (god I hope ange never reads this :). The pawn broker gives me £500 for it and a month to buy it back for £530. 1 week later he sells the ring for £3000. When i go to buy it its been sold off without my consent but the pawn broker still wants me to pay him £530 - You see how mad the banking system is.

But then again what would a simpleton like me who never sat an economics degree and wrote the answers the examiner wanted to hear know.

Jim said...

Another classic example of insanity form the so called, elite of minds:

When i worked for Océ (company who make and look after photocopiers) the fleet were managed by top level accountants and economists.

Now you could install 2 machines side by side. You may have a fantastic machine, never fails, and a horrible bag of nails that is always breaking down.

when the time comes to replace they will always replace the good one that never goes wrong. The reason for this is "the bad one has had x amount in parts and labour, so still owes us money"

Chris Whiteside said...

On your latter point first, not least because I basically agree with you on this one, anybody responsible for that policy at Oce who called themself an "Economist" certainly didn't take the same courses I did or pass the same exams I sat.

If they had they would have learned about things competent economists called "Sunk costs" which are a more academic way of expressing things that people with common sense have known for centuries and described with expressions like "throwing good money after bad."

People with lots of academic degrees do sometimes get things wrong and it is not entirely unknown for received wisdom among the greatest minds in an entire profession to hold a view when some new evidence comes along and proves it mistaken. That's why an open mind, transparent procedures, and a willingness to engage with different views are so important. (It's also why I don't delete comments on this blog just because I disagree with them, unless they are also libellous or offensive.)

However, and I'm trying to avoid sound patronising too, the degree of intellectual rigour with which British Universities challenge the ability of their students not just to parrot lectures but to prove you understand the material in them and think about the implications it is a bit greater than you might find in a Scientology exam.

The reason I don't agree with your argument that "money does not exist" is that the bulk of money used by most civilisations, including ours up to about three hundred years ago, was in forms which did not equate to a debt in the way that most modern money does.

The majority of money in history was backed, not by a promise to pay, but by the value of the metal in the coinage.

And the fact that the money used by our society, which can be expressed in the form of debts, generally behaves in the same ways that money backed by the value of the specie or other metal in the coins did, is evidence that the concept of money per say has an objective impact, one which can be and was measured, on what is happening in an economy (sometimes for good, sometimes for ill.)

Jim said...

Once upon a time.... yes the Uk pound was convertable, hence its name the pound sterling. but since 1931 that has not been the case. now i do accept that under the bretton woods agreement the pound could be exchanged for dollars, which in turn could be exchanged for gold, but there is the start of a round about system, and now since the dollar cant be exchanged then we have a problem.

No one knows what a promise to pay the bearer on demand the sum of 10 pounds actully is.

Its nothing, its based on a whim and a prayer, it means squat diddly. Zero, Ziltch, Nothing.

the ledger balance is 0, always, it has to be. so you see its all changing credit which a human can have into debt which a person or copreration can have, and creating debt notes to represent it