So, we’re told a zero or negative inflation rate is bad for the economy because people will stop spending money in hopes for better bargains in the future. This will be a great test! Will G.B. collapse because their currency isn’t losing value? Or will they continue to “improve” economically?
Read this babbling piece and put it in context of what they preached not so long ago …..
LONDON (AP) — Britain’s annual rate of inflation dropped back to zero in August from 0.1 percent in July amid sharp falls in fuel prices.
The Office of National Statistic said Tuesday that the drop in consumer price inflation was due to a smaller rise in clothing prices compared with a year ago. Rising prices in soft drinks and furniture offset the fall in part.
The low rate will encourage the Bank of England to stay its course and refrain from raising interest rates, as inflation remains well below its target of 2 percent.
Governor Mark Carney has said that the Bank of England is “drawing closer” to a rate increase — with things expected to become clearer by year’s end — as Britain’s economic growth remains among the fastest among advanced economies.
Britain’s inflation rate has remained remarkably low over the last several years. (Well, the official inflation rate) And, yet, they’ve outperformed most other advanced economies. All the while, the BoE has targeted a 2% inflation rate while never really getting there.
Could it be that the Brits are consuming more because they get to keep their purchasing power while the rest of us lose ours? So, fuel prices have dropped, being the main factor in the zero inflation rate. What are the Brits going to do? Stop buying gasoline or heating their homes in hopes for future savings? It was always an imbecilic notion, as is the notion to raise interest rates to fix something which is clearly not broken.
An interest rate raise by the UK is as suicidal as an interest rate raise in the US.
The question on everyone’s mind should be, “who are these lunatics and why did we allow them such power?”