10.1 UK inflation and its going higher

 Hi Readers markets around the world are trading higher but lets see for how long?

The illusion that the central banks will pivot is nothing more but a dream and hope.

We have just had the Reserve bank of New Zealand increase rates again by .50bps for the fourth time in a row. We have just seen the UK inflation figures and yes over 10% CPI ,so what does that tell you ?

What the central banks are doing isn't working this slow and steady approach is making it worse as inflation is becoming stuck on the economy. 

So what are the options going forward for the central banks? there are a few but they are quickly becoming irrelevant if they don't act soon.

1. Squeezing the balance sheet has to occur this side of Christmas and completed.

2. Raise interest rates way quicker than what they are doing so, the softly softly approach is feeding inflation. Yes central banks are looking to curb demand and allow things to settle down without stimulus, but this idea works well on a computer model not in reality.

3. The biggest fear central banks now have is wage inflation, should the people up-rise for wage rises then this inflation will last for 5 years at the minimum.

4. The other option is to use American economics and have an inflation figure less everything that's going up, if we calculated inflation the same as we did in 1990 the current US inflation would be 16.8% where would interest rates be then ?

5. The only other option which is the right option is to immediately increase rates higher than the rate of inflation. As the IMF said to other countries like Argentina, Brazil and Colombia. These countries got forced to increase rates higher than the rate of there inflation rate. But as the western world is so indebted a interest rate of such would bankrupt or wipe out 30 years of wealth. Now you can see why every government around the world is trying to blame Russia for there inflation which had begun way before Russia's invasion. Inflation begun when all government had started giving stimulus cheque's for free. Regardless of the conditions no government had the right to do what it did. But society has become so entitled in there thinking that instant gratification is a cancer culture.

 So as you can see we are in some very difficult times and those of you who are start can put the two together. The you will own nothing and be happy statement is taking shape infront of our very eyes.

 

This post is for educational purposes.

Seek professional advise on the above.