Posts tagged as:
“Just allow it…just admit it. It doesn’t matter where the inflation comes from. Just let it stay…”
SLASHING the Bank of England’s base interest rate to an historic low of 0.5% was supposed to “rebalance” the economy…tipping it away from galloping consumption towards an export-led recovery.
But all that the Pound’s slump since rates began sinking in March 2008 has done so far, however, is gift a 50% gain to UK gold owners.
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How long will people choose to hold any wealth in cash given it’s losing value thanks to negative real rates of interest…?
PEOPLE don’t always do what policy-makers expect or demand of them. And a good job, too.
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Before we get on to today’s Money Morning, this…
“The 2010 Walkley Award goes to… Jason Clout, for the Australian Financial Review’s ‘Rear Window’ column.”
That would be the result if your editor had, a) any influence over the award, and b) any interest in having any influence over the award.
In last Friday’s Money Morning we wrote:
“Let’s see if Peter Martin and the other mainstream journos have balls big enough to take on the might of Christopher Joye. Rather than just fawning at every word he says and reprinting verbatim whatever he writes in the press releases, ask him some hard questions.”
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This morning we’re still chuckling away at Christopher Joye’s ‘revelation’ about the stock market being risky – 11.6 times riskier than cash apparently. Bless him.
We’re looking forward to his next bombshell. Maybe he’ll reveal to the world that water is wet! What? It is? [Shae, quick, get Einstein, Newton and Faraday on the phone right now. They've got some explaining to do!]
But thanks to Money Morning reader John, there’s something in yesterday’s email that we didn’t point out. Here’s the offending quote from Joye’s ‘Equity Finance for Home Owners: The Next Revolution in Housing Finance?’ paper that we quoted from yesterday:
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We’ll poke a stick at property and inflation today.
Inflation, if mixed with deflation is fine. Prices rise, then prices fall.
But inflation by itself, well, that isn’t good at all. If you look at the chart below, you can see perfectly how the value of money has been devalued almost without break for the last fifty years:
According to the Reserve Bank of Australia (RBA) numbers on Money Aggregates, the M3 money supply has increased from the equivalent of $6.7 billion in 1959 to $1.19 trillion by the end of 2009.
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