Explain inflation to me

[eggsarascal]

How does it work, in laymans terms please.

 

I thought it was when wages go up the price of other stuff goes up, Which can be a good thing?

 

Uncontrolled inflation, I believe is a bad thing.

 

So why is inflation going up when wages aren't.

 

Is profit driving up inflation, but not aiding the working man/woman?

 

like I say, laymans terms.

[AHPP]

It's the increase in the money supply. Say there's £100 in the country. You have £1. You have 1% of the money and therefore 1% of the spending power. Then the central bank (BoE here) prints another £100. You now have 0.5% of the money and spending power.

 

The confusing bollocks about the price of milk, interest rates etc is put about to keep people talking about them when they should be more aggrieved at central banks making the pound in their pocket worth less.

[Stere]

Fractional Reserve Banking Doesn't Cause Inflation - Here's What Does

WHATISMONEY.INFO

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Fractional reserve banking is often blamed for many of the problems inherent to an ever-expanding money supply. We...

 

Inflation explained here......

 

As for low wages alot of factors:

 

Weak trade unions, pound has devalued against euro and dollar esp  since brexit low productivity due  lack of investment poorly skilled workers etc.

 

UK has had the lowest wage growth in western europe for yrs and lowest salary when adjusted for  cost of living

 

List of European countries by average wage - Wikipedia

EN.WIKIPEDIA.ORG

 

 

 

 

Edited July 20, 2022 by Stere

[Squaredy]

9 hours ago, eggsarascal said:

How does it work, in laymans terms please.

 

I thought it was when wages go up the price of other stuff goes up, Which can be a good thing?

 

Uncontrolled inflation, I believe is a bad thing.

 

So why is inflation going up when wages aren't.

 

Is profit driving up inflation, but not aiding the working man/woman?

 

like I say, laymans terms.

Inflation is basically the cost of everything (or at least lots of things) going up.  The problem with inflation is mainly 1) if your income does not also go up you will be able to buy less and 2) anyone with savings will find the value of those savings drops (unless the savings are going up at least as much as inflation which is unlikely).

 

BUT like everything "Tis an ill wind that blows no-one any good".  So for people with debt inflation can be a very good thing.  In fact in the long run it can be marvellous as the value of that debt reduces.  Best example is if you bought a house and borrowed say £50,000; ten years later that debt has not increased with inflation - it will be £50,000 less the repayments.  But your income will have risen (hopefully) due to wages keeping pace with inflation; so in real terms the £50,000 debt will be much less significant for you.

 

So inflation is very bad for people on fixed incomes.

 

Inflation is very good for governments who have just borrowed vast amounts of money to fund pandemic costs.

[Steve Bullman]

6 minutes ago, Squaredy said:

Inflation is very good for governments who have just borrowed vast amounts of money to fund pandemic costs

It’s almost like they are pushing inflation 🤔

[eggsarascal]

13 minutes ago, Squaredy said:

  But your income will have risen (hopefully) due to wages keeping pace with inflation; so in real terms the £50,000 debt will be much less significant for you..

I get what you are saying but the above seems to be a stumbling block, I don't know anyone that's had a 9.4% pay rise.

[doobin]

9 hours ago, AHPP said:

It's the increase in the money supply. Say there's £100 in the country. You have £1. You have 1% of the money and therefore 1% of the spending power. Then the central bank (BoE here) prints another £100. You now have 0.5% of the money and spending power.

 

The confusing bollocks about the price of milk, interest rates etc is put about to keep people talking about them when they should be more aggrieved at central banks making the pound in their pocket worth less.

This guy gets it.

 

The money supply was increased after the 2008 crash- kicking the can down the road, rather than face the necessary pain. Since then, the bankers paid lip service whilst carrying on their shenanigans in other things than the subprime mortgage market.

 

Just as it looked like the music was about to stop (removal of the Term Funding Scheme and others which basically let banks 'borrow' from the central banks at close to 0%, to lend out at 30% on credit cards etc)- along came COVID. Cue an avalanche of helicopter money. Furlough, bounce back loans, grants with no criteria other than 'are you a business'. A massive increase in the monetary supply. Surprise surprise, Bitcoin hit $65k and houses shot up by 20% as people found themselves awash with (essentially) free money.

 

We need to hang the bankers from every lampost and revert to the Gold Standard. That's the physical gold standard, not the paper gold market, which is the bankers current plaything:

Paper Gold Price Manipulation—Rigged to Fail - Matterhorn - GoldSwitzerland

GOLDSWITZERLAND.COM

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As the paper gold price falls in the previous week, manipulation in the markets has never been more blatant.

 

Edited July 20, 2022 by doobin

[GWYNFIL]

9 minutes ago, doobin said:

This guy gets it.

 

The money supply was increased after the 2008 crash- kicking the can down the road, rather than face the necessary pain. Since then, the bankers paid lip service whilst carrying on their shenanigans in other things than the subprime mortgage market.

 

Just as it looked like the music was about to stop (removal of the Term Funding Scheme and others which basically let banks 'borrow' from the central banks at close to 0%, to lend out at 30% on credit cards etc)- along came COVID. Cue an avalanche of helicopter money. Furlough, bounce back loans, grants with no criteria other than 'are you a business'. A massive increase in the monetary supply. Surprise surprise, Bitcoin hit $65k and houses shot up by 20% as people found themselves awash with (essentially) free money.

 

We need to hang the bankers from every lampost and revert to the Gold Standard. That's the physical gold standard, not the paper gold market, which is the bankers current plaything:

Paper Gold Price Manipulation—Rigged to Fail - Matterhorn - GoldSwitzerland

GOLDSWITZERLAND.COM

---

As the paper gold price falls in the previous week, manipulation in the markets has never been more blatant.

 

I agree! real things. All cash dies soon enough. its not prices going up its the purchasing power of paper money going down!

[Retired Climber]

10 hours ago, AHPP said:

It's the increase in the money supply. Say there's £100 in the country. You have £1. You have 1% of the money and therefore 1% of the spending power. Then the central bank (BoE here) prints another £100. You now have 0.5% of the money and spending power.

 

The confusing bollocks about the price of milk, interest rates etc is put about to keep people talking about them when they should be more aggrieved at central banks making the pound in their pocket worth less.

This, in my opinion, is the best answer. 

The government inject a load of QE money into the economy, which makes the money you have less rare, so less powerful. 

Edited July 20, 2022 by Retired Climber
Uncontrollable fingers.

[doobin]

29 minutes ago, GWYNFIL said:

I agree! real things. All cash dies soon enough. its not prices going up its the purchasing power of paper money going down!

In fairness, probably at least half of the recent inflation in consumer things is the price going up because the cost of energy is shooting up. 
 

 But the asset bubble is down to quantative easing.