Best of the Week
Most Popular
1. Investing in a Bubble Mania Stock Market Trending Towards Financial Crisis 2.0 CRASH! - 9th Sep 21
2.Tech Stocks Bubble Valuations 2000 vs 2021 - 25th Sep 21
3.Stock Market FOMO Going into Crash Season - 8th Oct 21
4.Stock Market FOMO Hits September Brick Wall - Evergrande China's Lehman's Moment - 22nd Sep 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
7.AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
8.Why Silver Price Could Crash by 20%! - 5th Oct 21
9.Powell: Inflation Might Not Be Transitory, After All - 3rd Oct 21
10.Global Stock Markets Topped 60 Days Before the US Stocks Peaked - 23rd Sep 21
Last 7 days
How Stagflation Effects Stocks - 5th Dec 21
Bitcoin FLASH CRASH! Cryptos Blood Bath as Exchanges Run Stops, An Early Christmas Present for Some? - 5th Dec 21
TESCO Pre Omicron Panic Christmas Decorations Festive Shop 2021 - 5th Dec 21
Dow Stock Market Trend Forecast Into Mid 2022 - 4th Dec 21
INVESTING LESSON - Give your Portfolio Some Breathing Space - 4th Dec 21
Don’t Get Yourself Into a Bull Trap With Gold - 4th Dec 21
GOLD HAS LOTS OF POTENTIAL DOWNSIDE - 4th Dec 21
4 Tips To Help You Take Better Care Of Your Personal Finances- 4th Dec 21
What Is A Golden Cross Pattern In Trading? - 4th Dec 21
Bitcoin Price TRIGGER for Accumulating Into Alt Coins for 2022 Price Explosion - Part 2 - 3rd Dec 21
Stock Market Major Turning Point Taking Place - 3rd Dec 21
The Masters of the Universe and Gold - 3rd Dec 21
This simple Stock Market mindset shift could help you make millions - 3rd Dec 21
Will the Glasgow Summit (COP26) Affect Energy Prices? - 3rd Dec 21
Peloton 35% CRASH a Lesson of What Happens When One Over Pays for a Loss Making Growth Stock - 1st Dec 21
Stock Market Sentiment Speaks: I Fear For Retirees For The Next 20 Years - 1st Dec 21 t
Will the Anointed Finanical Experts Get It Wrong Again? - 1st Dec 21
Main Differences Between the UK and Canadian Gaming Markets - 1st Dec 21
Bitcoin Price TRIGGER for Accumulating Into Alt Coins for 2022 Price Explosion - 30th Nov 21
Omicron Covid Wave 4 Impact on Financial Markets - 30th Nov 21
Can You Hear It? That’s the Crowd Booing Gold’s Downturn - 30th Nov 21
Economic and Market Impacts of Omicron Strain Covid 4th Wave - 30th Nov 21
Stock Market Historical Trends Suggest A Strengthening Bullish Trend In December - 30th Nov 21
Crypto Market Analysis: What Trading Will Look Like in 2022 for Novice and Veteran Traders? - 30th Nov 21
Best Stocks for Investing to Profit form the Metaverse and Get Rich - 29th Nov 21
Should You Invest In Real Estate In 2021? - 29th Nov 21
Silver Long-term Trend Analysis - 28th Nov 21
Silver Mining Stocks Fundamentals - 28th Nov 21
Crude Oil Didn’t Like Thanksgiving Turkey This Year - 28th Nov 21
Sheffield First Snow Winter 2021 - Snowballs and Snowmen Fun - 28th Nov 21
Stock Market Investing LESSON - Buying Value - 27th Nov 21
Corsair MP600 NVME M.2 SSD 66% Performance Loss After 6 Months of Use - Benchmark Tests - 27th Nov 21

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

George Osborne Does Not Care About Bank of England Governor's Letter

Politics / Inflation Feb 14, 2012 - 07:19 AM GMT

By: Mario_Innecco

Politics

The governor of the Bank of England is supposed to write a letter to the Chancellor of the Exchequer (U.K. Finance Minister) explaining why he has not succeeded in maintaining the annual growth in the Consumer Price Index (CPI) within a range between 1% and 3%. The point of maintaining a median CPI around 2% is to safeguard the purchasing power of the currency that Britons use. The Bank of England and H.M. Treasury are supposed to protect the currency of the realm.


If the CPI is above 3% the Bank of England is expected or supposed to tighten monetary policy in order to reign in the rise in the cost of living and protect the value of the British pound. If the CPI drops below 1% Mr King or Sir Mervyn and his colleagues at the Monetary Policy Committee (MPC) are expected to cut rates in order to bring CPI towards what is seen as a stable rate of growth of 2%.

The latest CPI data for January 2012 was published this morning and it came out at 3.6% and as a result Mr King wrote another letter to George Osborne, the Chancellor of the Exchequer, explaining the actions of the MPC in lieu of the fact that they have missed the CPI target. The last time the CPI was within the target of 1% and 3% was in January of 2009 when it rose at an annual rate of 2.9%! So for over two years the CPI has been above the upper target of 3% and Mr King has written a letter every month to the cahncellor!

What a credible central banker should have done in these last two years would have been to raise interest rates in order to bring the CPI back within the target area but Sir Mervyn has actually done the exact opposite as he has cut the official rate to 0.5% and he has also printed £325 billion out of thin air in order to keep the Treasury's borrowing costs low as the U.K. national debt has ballooned above £1'000 billion or £1 trillion!

The reason George Osborne has not fired the governor of the Bank of England is that he does not care about the purchasing power of the currency as the department he runs, H.M. Treasury, is the biggest debtor in the U.K. and a depreciating currency is actually in his interest as it erodes the value of the U.K. public debt. The downside of this policy, of course, is that the British public is being fleeced through the hidden tax called inflation.

Investors and economists still buy into this deception that the U.K. is in danger of entering a deflationary spiral and that is why the Governor and the Chancellor have been able to keep up this policy of what some people call financial repression or some would even call outright "legalised theft" through inflation. The public though is getting restless as the cost of living keeps rising and their standard of living keeps dwindling.

By Mario Innecco
ForSoundMoney.com

At ForSoundMoney we stand for a hard currency. We believe in a monetary system based on commodity money and a free-market banking system where central banks are non-existant.

Mario Innecco Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in