Rate Cut + 100 Billion Money Printing

Well, when central bankers create currency, they aren't creating wealth (though they want us to think they are). They aren't even stimulating the economy.

The goods and services in the economy is the wealth. The currency is the way we measure the wealth. You can't create wealth by creating the measuring tool.

It is like going to a dry cleaner and printing receipts and thinking you are creating new suits.

 

Its a sugar hit for economic activity for a lack of better words. In that sense it does succeed in what it is design to do.

 

John,

How far on the radar do you think is inflation?

 

Illusive Dreams, good question.

Firstly, I don't think we do a good job of measuring price inflation. I cheekily call the CPI the CP-lie because it strips out too many things to make it meaningful. I think it is deliberately a dishonest measure so central banks can justify lower borrowing costs.

It strips out food, energy and asset prices. To illustrate, how can we have house prices going up at 15% pa and no inflation?

But I digress. I think in terms of consumer price inflation, I think we will see inflation of asset prices and essentials now, and deflation of non-essentials. But I think by 2022/3 we will be wondering how we get the house price genie back in the bottle.

 

? No it doesn't.