Food prices will continue to rise, because the value of the GBP is going down. The pound is worth a lot less than it previously was. Over the past three years or so, we have injected 3 out of very 4 pounds in existence. So every pound that existed four years ago, is now effectively worth only 25p.
Now, you don’t see the inflation of the money supply as a loss of value in the currency, because all the other countries were doing the same thing. So the pound stayed where it was in relation to the Euro or the Dollar.
But real things like steel and oil and gas and wheat and coffee and stuff. We didn’t make four times as much of them when we made four times as much money for the world to spend. So their prices have to go up by 400% to balance it out.
It takes time, years, and it doesn’t happen evenly, because the relationship between real goods and money is very complexed and convoluted. Steel for example gets mined and moved around the world which uses oil. It gets refined which used coal or gas. Wheat has an 18 month delay because orders are placed before the wheat for the next year is planted, and it isn’t delivered until it is harvested.
And we have geopolitical strife and politics and various extremist groups to be pandered to, and the WEF plans for each of our countries to follow etc. And on top of that you have the nuances of the specific mechanism the extra money was injected into the economy.
So for example capping everyone’s fuel bills was money creation, but in reality it was delayed money creation because the energy companies give us the fuel and then hold the debt owed to the, from the government on their books as a debt which they write off over a period of time against their taxes. So the government created the money, but in reality they pulled taxation from the future into the now to give us a price cap, and will have to suffer the loss of that revenue in years to come.
Which is a good move, because the pound in the future will be worth less than the pound today, and the energy bills in the future will be higher so the taxation on the profits will be the same relative to the value of the pound today. They give an apparent benefit to make us all happy now, and they make a profit in the future because we will be paying higher energy bills due to the money supply being inflated at our request.
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Bottom line is we’re in for price rises across the board for another three or four years, by which time staple products should level out at about £3-£4 for every £1 they cost in 2015.
It has nothing to do with Ukraine or China or Oil or Gas giants. This all stems from when we started printing money hand over fist in 2008, reduced the interest rates to zero, and never stopped printing money for 15 years. We lived the life of free money (as a country) and now we have to pay the piper.
Notice whenever they show you a graph of the Bank of England interest rate they only show you it back to 2008? It looks like a big pan with a huge flat bottom, and us spiking is to 4%, worst interest rates in 15 years!
Ever look at the 150 years before that? Ever ask yourself why the interest rate has averaged 5.25% for close on two centuries, and we’re complying about it not even yet reaching average, let alone matching inflation? Why on earth should a bank lend you £300K for a house at 6% when with inflation at 10% it is guaranteed to lose 4% on its investment. Can people afford to pay their mortgages when their interest rate hits 12%? We shall see. This is going to be a good time for first time buyers because the Govt is not going to be able to support everyone’s mortgage when inflation hits.