Why do the press do this?

[Suff]

So we are now told that there was NO DOUBLE DIP RECESSION. There was, in fact, growth in GDP.

Erm. So that song and dance and government scalp hunting was what? A LIE?

OK so it's not important because GDP is now 4% below where it was at the peak of the recession! Causing problems and hurting people.

Really. So what's this?



Ah but the economists run to their big stick and start ranting. "You don't understand that's just MONEY"

But what do they mean? Well of course they mean inflation, it means that even though we make MORE money, it's worth less. Inflation destroys the value of GDP. It destroys wealth. But and this is most important of all it

Destroys DEBT

So let me put it this way. Greece is suffering the wrath of Hades because it is tied to a Euro which is not allowed to cause inflation. So they have to suffer and suffer and suffer and pay and pay and pay, all to ensure that Germany and France don't lose any of the wealth they created selling goods and services to countries who borrowed the money from them in the first place.

Great we're not in the Euro. So what does it mean for us?

Well what this inflation means for us is that, once a decade or two have passed, our debt is devalued by about 75%. Which means we only have to pay back, in real terms, 25% of the money we borrowed. Because our GDP is so much bigger (but worth less due to inflation), and the debt is fixed and doesn't get any bigger because of inflation.

It's an oxymoron really because inflation deflates debt. It makes it smaller in real terms. Given that our main problem is the public debt, I'd want to make it smaller too....

So, really, what do you want?

Low inflation, real terms 1% per year growth in GDP and austerity for the next 50 years?
OR
High inflation, real terms loss of GDP value of 1% per year and real terms devaluation of debt by 5% per year?????

Erm, let me see. If it was me I'd go for option 2. But apparently Labour thinks we should go with option 1 and BORROW MORE MONEY to invest in PAYING FOR THE DEBT WE DIDNT' DEVALUE.

Sorry was I shouting? It irritates the hell out of me.

Just one other point. The biggest inflationary pressures we feel today are in our energy costs. Basically fuel. Some of the largest taxes are on energy and fuel. So inflation is driven by higher energy costs. Which have higher % taxes on them which means that the government makes more money on it. They make more taxes by making our debt smaller by driving inflation...

So Mr Millipede, you're going to fix all of the problems of the UK by??????

Yep, being a D1ck and buying votes.

Does everyone remember the 80's? We got inflation under control and then ran it at a solid 8.5% for a decade, whilst growing GDP and sorting out the economy. At the end of our decade Maggie was able to pay back chunks of the war debt. Because we'd destroyed it's value. Exactly the opposite of the 70;s where Labour shrank our GDP and ran up to 26% inflation.

If you keep growing GDP and running inflation, so long as the loss of GDP is less than inflation, then you destroy debt and increase your ability to pay it back.

So why don't I see everyone Feting this government?

Big banks and business lose money!

And that. I am sad to say, is the way it is.

[Workingman]

The process of inflating one's way out of debt is well known. However, it is easier to manage in stable times. To attempt to do it in a period of austerity is a huge balancing act as deflating away public debt will have a huge effect on the majority paying for it - us. Osborne and the government already do not have many of us on their side as they are perceived to have done little about the financial sector irregularities while hitting the little man on the head with a huge frying pan.

It will be interesting to see how the new BOE boss acts once he takes over the reigns in July.

[Suff]

Yes but most people believe that because that is what the press is telling them.

The press is also telling them that GDP is constantly falling (note they don't talk about inflations, just GDP. There is never a debate on whether the GDP growth, slightly lower than inflation and still tracking upwards, is enough to deal with our frozen debt.

Surely the biggest issue is to stop borrowing money so that we can get rid of the debt that we already have, which is becoming smaller.

Even the coalition can't stop borrowing money, but there is a BIG difference between cutting borrowing and at least Trying to get rid of the debt and INCREASING borrowing on the wing and a prayer hope that an increase in GDP will magic it away.

We heard 13 years of "Borrowing to Invest" from Brown. In the end it was nothing more than borrowing to waste without paying back.

I want to see THAT front and centre on every news article until the people get it. Then they might stop listening to Milliband and Balls and start thinking for themselves.

[cromwell]

I remember you posting something similar Suff. Basically, I would be wondering how "independent" the supposedly independent Office of National Statistics really is.

[Suff]

Independently Labour.