It has become apparent to commentators like Liam Halligan that the Great Deflation Scare of 2009 is, in his words :
“… largely a myth – an alibi for wildly expansionary fiscal and monetary policy concocted by Western governments and their media lackeys.
After all, where is deflation? Data released last week put annual US core inflation at no less than 4pc. So why is the Fed doing this, following the Bank of England’s lead? Because the real solution – forcing banks to face the music, while rescheduling massive private and public debts – is too politically frightening for our so-called leaders to contemplate.
A decision has been made, but not announced: we’ll inflate away our debts instead”
Media lackeys ? That’s a bit strong. Anyone in mind, Liam ? Robert Peston’s been waving the spectre of deflation for some time.
I invite readers to study the evolution of yesterdays lead BBC news story, from “Deflation risk as prices to fall” all the way through to “Surprise hike in consumer prices”.
It turns out that the only component of inflation to fall is mortgage costs – completely under the control of HMG/BoE. Everything else is going up. The only deflation is caused by the Government.