Oops! Britain’s inflation is heading back to 4 per cent territory as you’d expect with the Bank of England printing money and using the debt to finance government spending. If you create more money, you reduce the value of the money. Citi has done another brilliant research note, which it is putting online, laying out the implications. The punters are facing pay freezes, or settlements below 2 per cent. The cost of living is soaring. Result: misery. Here are the two graphs from Citi that spell it out. First, inflation (much affected by the VAT hike in the same way that it was artificially reduced by the VAT cut. The resulting inflation was, of course, a great excuse to print money to finance Brown¹s fiscal debauchery.
And let’s not pretend that this is a global phenomenon.
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