11 Aug

Inflation

It seems fairly obvious that if the currency is rebased, inflation will occur. If the govt. announces that each pound in your bank account will be multiplied by ten overnight, the price of everything will rocket. Well, not everything. Your mortgage will suddenly have got a lot cheaper, unless your liability accounts are redenominated. But, one way or another, inflation will result. Central banks are creating money, or, at least, doing their level best to make commercial banks lend, and thereby create money. This has not been felt in CPI, much, except in that base effects more or less guarantee that stats will look bad for a couple of months, given that a year ago we were locked down hard.