Later, I’ll set out the case against inflation, which is caused by the instutional design of the banking system. For the moment, here’s a relevant article from the Cobden Centre:

Mr Smith works hard, plans carefully, and saves what he can, putting his money into a building society. He pays his credit card bills off each month, and tries to overpay his mortgage when he can.

Mr Smith got a 3% pay rise last year – inflation was only 2% – so he felt good about that. But… he doesn’t feel any wealthier.

Year after year, the government had said that the economy was growing strongly, but still, things seemed harder for his family and him. Train ticket prices up again. Heating bills rocketed when the price of oil went up, but never seemed to come down. He swears a loaf of bread and a pint of milk were much cheaper in years gone by.

When he changes his cash for Euros, he realises that his holiday in France is now unbearably expensive. His tax rates didn’t go up, but still, after all his bills were paid, he seemed to have less and less spare cash than he remembers a few years ago.

There are Mr Smiths everywhere. Careful folk, who plan, save for a rainy day and have a sense of personal responsibility.

Smith is the target.

Read the rest of the article.

One Comment

  1. I think a year ago Mervyn King was predicting inflation would now be back at 1% – now he says several more years of pain – he hasnt got a clue except to print money and debase the currency through QE so Goverment debts can be inflated away with no real adjustmnet to State spending. People like me who saved, didnt get into debt are getting screwed BIG TIME for the sake of the minority who over borrowed. From what I can see all the Goverment is interested in is talking cuts, The Big Society – meaningless beyond the Westminster media Village and AV – no interest. There are no plans for growth other than “lets just hope it happens”, no plans for tax cuts. Stuffed of HW