To think that what we/the economy needs is high inflation?

[lelainapierce]

It would wipe out the 'real' value of the debt and bring wages back into line with house prices.

Inflation hurts the rich, with their savings, and equalises the poor who have none.

It won't necessarily deal with the deficit or the debt either. For if potential lenders think that they will take a hit on their return (because of inflation), then they'll just increase interest rates to punitive levels (see Greece, Italy etc - different cause, but same effect).

Wages won't rise to keep pace with inflation - why would they? Inflation will result in higher raw material costs for manufacturing. The reason prices would go up would be to cover that. Where is the incentive for employers to increase their costs by putting up wages too, in any sector?

The poor suffer more from inflation than the rich too. If you are spending a higher proportion of your income and not saving and investing like the rich would then your cost of living is going to go up and what little income you have will be squeezed tighter. The rich don't care. They just won't save as much.

If there is inflation the house prices would go up too - why would house prices be the only price not to inflate? Doesn't make sense. The cost of building new homes would be greater as well. Plus if inflation rose too high, interests rates would as well which obviously makes mortgages more expensive.

Not sure you understand the complexities of the economy very well.

even if they did keep up, it would just make money almost worthless.
like Clossaint said - 1930s germany - the deutsche Mark became completely worthless- they were carrying a day's wages home in wheelbarrows, and if you could afford a loaf of bread in the morning, you'd had to sell your bed to buy one in the evening!

It would spiral out of control, because there'd be nothing to control it.

Germany ended up having to Start Again and make a new currency in order to stabilize their mess.

No not a good idea

aren't we suffering from high enough inflation already with expensive energy bills and food. I think it would make things worse.

people would have no money to spend and it would affect businesses. No one would be eating out or going to cinema etc. Not that we are doing that anyway.

Zimbabwe is another more recent example of inflation that got out of control and that was very recent. Rates exceed 3700% at one point - it had catastophic effects on the poor.

Why do you think the government, any government, has tried so hard to control inflation if it could be a good thing and could sort out the debt problem? Don't tell me it is just the Tories trying to protect the rich, when Labour aren't exactly applauding the rise in inflation but using it as a stick to beat the Tories with. It does nobody any favours except perhaps those who live off investment income and have paid for their homes already because their income would go with interest rates but even they will suffer a rise in the cost of living for other commodities.

My dd2 asked me if she would ever get £1000 a week pocket money - if you where in charge I am guessing the answer would be soon - and can you take this wheel barrel of cash down to the garage - we need milk

just saying

But isn't inflation figure measured in this country based on the CPI? If it used the RPI (which includes housing) it would be more reflective??

To get back to your question, it sounds a pretty dim idea

I lived in Brazil in the late 80s. I saw high inflation 30% annual, and also saw hyper-inflation, where the price you paid for milk for example, would go up twice by the end of the day. It was cheaper to smoke than to eat at one point.

I'd think, shall I buy the milk now, have it sit in the office and hope it doesn't go off, or run the risk of the price being significantly more after I finish work?

Do people actually think before they start some threads?

"I clearly mentioned wages being brought into line with house prices in my OP?"

You said high inflation would bring wages in line with house-prices. I don't know about anyone else but I haven't had a payrise in line with inflation for years. If you're suggesting employers should all start paying more... whoop-dee-doo, no shit Sherlock... but when order books are slim, paying everyone more just means fewer people stay employed. And house-prices tend to go up with inflation... they don't stand still whilst everything else costs more.

As you are the only one that 'sees' this as a Good Idea do you not think it would be better to read what people have written and do a little more thinking?

YABU, very few people get inflationary pay rises these days. Pensions definitely won't increase. There is already a significant proportion of the population who can barely afford basic food and fuel bills. A further increase inflation would only accelerate the process of impoverishment of these people and put even more people in this position.

Yay! My first ever deleted message

And OP, just how do propose you ensure wage inflation occurs and at least matching, if not exceeding price inflation?

May I suggest you read this book Economics for Dummies as it may answer some of your theory as to why it won't work.

I haven't had a pay rise for 2 years' whilst everything else is going up and there is no return on any savings. can't understand where OP got the idea that it would be good to have high inflation.

How insane. We've seen no wage rise, but inflated food and power/energy costs. Now we've had to turn on the heat, we're having to sell bits and bobs to avoid going in the hole every month, and we have no debt and eat a vegetarian mostly.

I would love to know what you wrote, niceguy. I suspect op may have a lot of personal debt.

If the OP has a lot of debt and interest rates rise she is fecked.

But the belief that high inflation is in any way good for the poor is erroneous in the extreme.

Feel ill at the thought of high inflation. Life really is tight enough, without inflation getting out of control. With inflation running rampage, people are forced to only buy the barest necessities & that kills economic growth. Everyone just gets poorer. Low inflation is ok, as long as it is in line with the rest of the economy.

I'm wracking my small brain to think of an example of when high inflation wasn't a sign of really awful things to come & I'm not coming up with anything positive!

A lot of people with savings have just been prudent and are now being persecuted. We need zero inflation and high interest rates - with an inflation-linked bond available without limit (obviously with a lower interest rate) so as to keep the Treasury on the straight and narrow.

Indeed it does...

like I need a hole in the head, or a chocolate teapot.

Exactly, Andrew, ditto people who did not get into debt.

Wouldn't that just bring house prices up at the same rate anyway???

I agree Andrew.

I've been persecuted with low interest rates.
(of course, I've got a bit of debt now, so low interest rates are good)

having said that, if interest rates were better, like they were before I had to start spending my savings, I might not be in this debt now - low interest rate = fewer people spending = my bills going up but not getting enough customers to pay them = my debt.

if interest rates had been higher, not only would people be spending, but also, my own savings would be increasing instead of staying still, and I wouldn't have got this debt in the first place.

"Inflation hurts the rich, with their savings, and equalises the poor who have none".

I'm in a charitable mood, so am resisting the urge to just type "bollocks".

Anyhoo...

Inflation is screwing our household and we aren't 'rich' by any stretch of the imagination (single income in the south east). Prices are soaring on essentials everyone needs like food, transport and heating and anyone who has managed to scrape together any savings at all is being screwed. My DH and I are effectively been punished for living within our means, saving a bit when possible and not maxing out every credit card we could get our paws on in the good times. Bear in mind that not everyone who saves is 'rich'. There are plenty of people on low incomes who try to save even a little, even if its just to avoid getting into debt over Christmas. And do you really think poor people are somehow immune to the increasing cost of basic necessities or have all those stories about low income pensioners keeping the heating off in the depths of winter passing you buy? A rich person isn't going to notice that it suddenly costs £20 more to feed their family every week, because they have a lot more than £20 to spare. A poor person will.

PS Raising wages in line with inflation isn't the answer either (unfortunately ). Increasing wages will increase the cost of producting and transporting everything, which will further increase inflation. According to your argument wages would then have to be increased yet again, and round and round we go.