INFLATION IS COMING
THE G.B. POUND
The U.K. is the first region in the World to see inflation return.
“King Says U.K. Inflation Jump – Temporary – as Rate Reaches 3.7% “
May 18 (Bloomberg) – Bank of England Governor Mervyn King downplayed the threat of inflation after consumer prices jumped at the fastest annual pace since 2008, saying the surge is”temporary” and masks slack in the British economy.
The Bank Of England will, obviously, not confirm that the U.K. is entering a period of inflation. However, the U.K., like most of the world, has printed tons of paper money in order to stem off the world wide recession.
When there is an excess of paper currency floating through an economy, prices are automatically forced up. The mechanism is quite simple:
A buyer wants to purchase an item, such as a car or a loaf of bread. He has extra printed currency in his pocket, given to him by his employer who received it from the government. The seller knows this. He raises his price.
Boop!
The buyer buys! ( What is paper money good for, if not to buy things?)
And inflation moves ahead.
The U.S. DOLLAR
All the countries of the Western World have borrowed far beyond their means and have created a recession. To make the recession go away, their politicos have turned on the printing presses and passed trillions of dollars, pounds, euros, yen and yuan to their banks.
This process happened in the U.S., Europe, Japan and China. This will result in a World Wide Inflation!
JAPAN YEN
In the U.S., today, Tuesday, May 18, 2010, the core PPI (Purchasing Price Index) went up .2 of a percent. Not much, but the beginning.
Inflation has its advantages and disadvantages. Because inflation cheapens the value of money, it erases debt. Throughout recent history, weak countries across the world have erased their debts by inflating (or de-valuing) their currencies. (Twenty years ago, Greece would have ignored its debt simply by printing more Drachmas.}
Now Greece and the other debtor countries will have to wait for the Euro to become cheap. Exporting countries such as Germany and China do not like to see their currencies cheapen, since the cheapness reduces their purchasing power when their work is paid for in a cheaper currency.
For that reason, the hard working countries of the world want a stable currency. Everyone knows that the Swiss Franc and Japanese Yen are “Hard” currencies that do not vary with time.
The SWISS FRANC
ADVICE
If you are in debt, wait! Pay later with “funny money.”
If you have real estate and cannot sell, wait! People will buy at double the price within two years.
Inflation is not good — but it’s a fun ride.
